Income Statement

Learn the definition of the accounting cycle, and explore the process, including its 10 basic steps, and how when they are done a new accounting period begins. Many companies are in the business of mining natural resources from the earth. How does a company account for the value of the land as those assets are removed? This lesson will describe the accounting procedure called depletion.
Suppose you buy a $3,000 computer with a useful life of three years. In the first year, you spend $200 to fix […]

It creates a liability at the time the particular product is sold as the company has a liability, which starts when the product is sold. Keep in mind that this liability treatment is only necessary for companies that have to consistently repair or replace their products. If the company rarely ever has a warranty claim, they don’t need to record the liability. Instead, they can simply record the costs when they are incurred. Company A purchases components from various manufacturers (more&h […]

Examples of non-operating expenses include interest payments, write-downs, or costs from currency exchanges. In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service before deducting overhead, payroll, taxation, and interest payments. Nonoperating expenses and losses are often reported on the income statement after the subtotal Income from operations and will often appear with the caption Other income (more…) […]

Because wages are taxed at a top rate of about 43.4 percent, the resulting tax bill is substantially lower than the 50.5 percent rate they would face if they first payed the corporate tax and then paid individual tax on the dividends. The overwhelming majority of businesses in the U.S. are not C-corporations subject to the corporate tax. Rather, most businesses—about 95 percent—are “pass-throughs,” which have their income “pass through” to their owners to be taxed under […]

For purposes of illustration, closing entries for the Greener Landscape Group follow. The purpose of an income statement is to assemble all the account information on revenues and expenses recorded during an accounting period and present them in the standard income-statement format. An income statement helps users evaluate the past performance of an company and provides them a basis for predicting future performance. For example, a high level of total current income with a relatively low level […]

It’s then reduced by discounts, price adjustments, returns, and any other deductions to determine net income or net earnings. Save money without sacrificing features you need for your business. Net revenue is the total amount of the money you made from sales minus your direct expenses. This figure is calculated by dividing net profit by revenue or turnover, and it represents profitability, as a percentage. Net income is the profit that a business makes after deducting expenses and other a […]

You can also play this same price vs cost evaluation game to see where you could be saving money over the long term. The amount of money you have to put into maintaining the boat throughout the year is incredibly high. Between gas, renting a slip, storing it in the off-season, and maintenance, the total costs can be in the thousands each month. The value is decided by the marketplace on the basis of the benefits received from the combination of features, or specifications, present in a particul […]

One-time restructurings, impairments, and other charges are also typically missing from operating income, as are income tax expenses. Interest cash flows and any impacts, positive or negative, from foreign currency exchange are also accounted for farther down the income statement. From the operating profit figure, debt expenses such as loan interest, taxes, and one-time entries for unusual expenses such as lawsuits or equipment purchases are all subtracted. (more…) […]

Use this convention for nonresidential real property, residential rental property, and any railroad grading or tunnel bore. The recovery periods for most property are generally longer under ADS than they are under GDS. The following table shows some of the ADS recovery periods. The original use of the property must have begun with you after April 11, 2005. Original use means the first use to which the property is put, whether or not by you. Therefore, property used by any person before April 12 […]

Our online training provides access to the premier financial statements training taught by Joe Knight. The profitability in the first year is lower as compared to capitalizing the expense. Cash flows from operations is reduced as the expense is considered as the cash outflow from operations. Net income and the asset’s value is reduced due to the depreciation expense. By doing this, the business would subtract the $300 expense from their revenue of $5,000, which will result in a profit for […]