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Cash Method Of Accounting
The cash method of accounting, also known as cash-basis accounting, cash receipts and disbursements method of accounting or cash accounting (the EU VAT directive vocabulary Article 226) records revenue when cash is received, and expenses when they are paid in cash. As a basis of accounting, this is in contrast to the alternative accrual method which records income items when they are ''earned'' and records deductions when expenses are ''incurred'' regardless of the flow of cash. Cash method of accounting in the United States (GAAP) Use in contract accounting The cash method of accounting has historically been one of the four methods of recognizing revenues and profits on contracts, the other ones being the accrual method, the completed-contract method and the percentage-of-completion methods. Since the Tax Reform Act of 1986, the cash method can no longer be used for C corporations, partnerships in which one or more partners are C Corporations, tax shelters, and certain ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
European Union Value Added Tax
The European Union value-added tax (or EU VAT) is a value added tax on Good (economics), goods and services within the European Union (EU). The EU's institutions do not collect the tax, but member states of the European Union, EU member states are each required to adopt in national legislation a value added tax that complies with the EU VAT code. Different rates of VAT apply in different EU member states, ranging from 17% in Luxembourg to 27% in Hungary. The total VAT collected by member states is used as part of the calculation to determine what each state contributes to the Budget of the European Union, EU's budget. History German industrialist Wilhelm von Siemens proposed the concept of a value-added tax in 1918 to replace the German turnover tax however, the turnover tax was not replaced until 1968. The modern variation of VAT was first implemented by Maurice Lauré, joint director of the French tax authority, who implemented VAT on 10 April 1954 in France's Ivory Coast col ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Vocabulary
A vocabulary (also known as a lexicon) is a set of words, typically the set in a language or the set known to an individual. The word ''vocabulary'' originated from the Latin , meaning "a word, name". It forms an essential component of language and communication, helping convey thoughts, ideas, emotions, and information. Vocabulary can be oral, written, or signed and can be categorized into two main types: active vocabulary (words one uses regularly) and passive vocabulary (words one recognizes but does not use often). An individual's vocabulary continually evolves through various methods, including direct instruction, independent reading, and natural language exposure, but it can also shrink due to forgetting, trauma, or disease. Furthermore, vocabulary is a significant focus of study across various disciplines, like linguistics, education, psychology, and artificial intelligence. Vocabulary is not limited to single words; it also encompasses multi-word units known as c ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Basis Of Accounting
In accounting, a basis of accounting is a method used to define, recognise, and report financial transactions. The two primary bases of accounting are the cash basis of accounting, or cash accounting, method and the accrual accounting method. A third method, the modified cash basis, combines elements of both accrual and cash accounting. * The cash basis method records income and expenses when cash is actually paid to or by a party. * The accrual method records income items when they are earned and records deductions when expenses are incurred. * The modified cash basis records income when it is earned but deductions when expenses are paid out. Both methods have advantages and disadvantages, and can be used in a wide range of situations. In many cases, regulatory bodies require individuals, businesses or corporations to use one method or the other. Comparison Accrual basis The accrual method records income items when they are earned and records deductions when expenses are ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Accrual
In accounting and finance, an accrual is an asset or liability that represents revenue or expenses that are receivable or payable but which have not yet been paid. In accrual accounting, the term accrued revenue refers to income that is recognized at the time a company delivers a service or good, even though the company has not yet been paid. Likewise, the term accrued expense refers to liabilities that are recognized when a company receives services or goods, even though the company has not yet paid the provider. Accrued revenue is often recognised as income on an income statement and represented as an accounts receivable on the balance sheet. When the company is paid, the income statement remains unchanged, although the accounts receivable is adjusted and the cash account increased on the balance sheet. On the other hand, an accrued expense is recognised as an expense on the income statement and represented as a liability on the balance sheet. Once payment is made, the incom ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Accrual Method
In accounting, a basis of accounting is a method used to define, recognise, and report financial transactions. The two primary bases of accounting are the cash basis of accounting, or cash accounting, method and the accrual accounting method. A third method, the modified cash basis, combines elements of both accrual and cash accounting. * The cash basis method records income and expenses when cash is actually paid to or by a party. * The accrual method records income items when they are earned and records deductions when expenses are incurred. * The modified cash basis records income when it is earned but deductions when expenses are paid out. Both methods have advantages and disadvantages, and can be used in a wide range of situations. In many cases, regulatory bodies require individuals, businesses or corporations to use one method or the other. Comparison Accrual basis The accrual method records income items when they are earned and records deductions when expenses are ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Completed-contract Method
The Completed-contract method is an accounting method of work-in-progress evaluation, for recording long-term contracts. GAAP allows another method of revenue recognition In accounting, the revenue recognition principle states that revenues are earned and recognized when they are realized or realizable, no matter when cash is received. It is a cornerstone of accrual accounting together with the matching princip ... for long-term construction contracts, the percentage-of-completion method. With this method, revenue is recognized when the contract is fulfilled. The contract is considered complete when the costs remaining are insignificant. General description Accounting for long term contracts can be done in two ways: through the completed-contract method and the percentage of completion method. The choice between the two depends on the provisions of SOP 81-1 from the AICPA. The completed-contract method recognizes income only when the contract is completed or substantially co ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Percentage-of-completion Method
Percentage of completion (PoC) is an accounting method of work-in-progress evaluation, for recording long-term contracts. GAAP allows another method of revenue recognition for long-term construction contracts, the completed-contract method The Completed-contract method is an accounting method of work-in-progress evaluation, for recording long-term contracts. GAAP allows another method of revenue recognition In accounting, the revenue recognition principle states that revenues are .... When to use The accounting for long term contracts using the percentage of completion method is an exception to the basic realization principle. This method is used wherein the revenues are determined based on the costs incurred so far. The percentage of completion method is used when: *Collections are assured *The accounting system can: #Estimate profitability #Measure progress toward completion. Losses are recognized in the year when they are discovered, the same way as for the completed co ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Tax Reform Act Of 1986
The Tax Reform Act of 1986 (TRA) was passed by the 99th United States Congress and signed into law by President Ronald Reagan on October 22, 1986. The Tax Reform Act of 1986 was the top domestic priority of President Reagan's second term. The act lowered federal income tax rates, decreasing the number of tax brackets and reducing the top tax rate from 50 percent to 28 percent. The act also expanded the earned income tax credit, the standard deduction, and the personal exemption, removing approximately six million lower-income Americans from the tax base. Offsetting these cuts, the act increased the alternative minimum tax and eliminated many tax deductions, including deductions for rental housing, individual retirement accounts, and depreciation. Although the tax reform was projected to be revenue-neutral, it was popularly referred to as the second round of Reagan tax cuts (following the Economic Recovery Tax Act of 1981). The bill passed with majority support in both the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
C Corporation
A C corporation, under Income tax in the United States, United States federal income tax law, is any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. Many companies, including most major corporations, are treated as C corporations for U.S. federal income tax purposes. C corporations and S corporations both enjoy limited liability, but only C corporations are subject to corporate income taxation. Versus S corporations Generally, all for-profit corporations are automatically classified as a C corporation unless the corporation elects the option to treat the corporation as a flow-through entity known as an S corporation. An S corporation is not subject to income tax; rather, its shareholders are subject to tax on their ''pro rata'' shares of income based on their shareholdings. To qualify to make the S corporation election, the corporation's shares must be held by residents, citize ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Tax Shelter
Tax shelters are any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities, including state and federal governments. The methodology can vary depending on local and international tax laws. Types of tax shelters Some tax shelters are questionable or even illegal: *Offshore companies. Due to differing tax rates and legislation in each country, tax benefits can be exploited. For example, if Import Co. buys $1 of goods from India and sells for $3, Import Co. will pay tax on $2 of taxable income. However, tax benefits can be exploited if Import Co. sets up an offshore subsidiary in the British Virgin Islands to buy the same goods for $1, sell the goods to Import Co. for $3 and sell it again in the domestic market for $3. This allows Import Co. to report taxable income of $0 (because it was purchased for $3 and sold for $3), thus paying no tax. While the subsidiary will have to pay tax on $2, the tax is payable to the tax authority of Brit ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Tax Planning
Tax avoidance is the legal usage of the tax regime in a single territory to one's own advantage to reduce the amount of tax that is payable. A tax shelter is one type of tax avoidance, and tax havens are jurisdictions that facilitate reduced taxes. Tax avoidance should not be confused with tax evasion, which is illegal. Forms of tax avoidance that use legal tax laws in ways not necessarily intended by the government are often criticized in the court of public opinion and by journalists. Many businesses pay little or no tax, and some experience a backlash when their tax avoidance becomes known to the public. Conversely, benefiting from tax laws in ways that were intended by governments is sometimes referred to as tax planning. The World Bank's World Development Report 2019 on the future of work supports increased government efforts to curb tax avoidance as part of a new social contract focused on human capital investments and expanded social protection. "Tax mitigation", "tax ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Tax Deduction
A tax deduction or benefit is an amount deducted from taxable income, usually based on expenses such as those incurred to produce additional income. Tax deductions are a form of tax incentives, along with exemptions and tax credits. The difference between deductions, exemptions, and credits is that deductions and exemptions both reduce taxable income, while credits reduce tax. Above and below the line Above and below the line refers to items above or below adjusted gross income, which is item 37 on the tax year 2017 1040 tax form. Tax deductions above the line lessen adjusted gross income, while deductions below the line can only lessen taxable income if the aggregate of those deductions exceeds the standard deduction, which in tax year 2018 in the U.S., for example, was $12,000 for a single taxpayer and $24,000 for married couple. Limitations Often, deductions are subject to conditions, such as being allowed only for expenses incurred that produce current benefits. Capital ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
