Income Statement

To claim depreciation, you must usually be the owner of the property. You are considered to be the owner of property even if it’s subject to a debt. You use the property in your business or income-producing activity . You may have to use Form 4562 to figure and report your depreciation. If the OID isn’t de minimis, you must use the constant-yield method to figure how much you can (more…) […]

Profits refer to the leftover revenue a business has once it has subtracted all of its costs for the same period. Profits are the primary motivators of business which seek profits and aim to minimize losses. Net Profit Before Taxmeans for any period the pre-income tax net income of Borrower for such period in accordance with GAAP, determined on a consolidated basis. Profit After TaxProfit After Tax is the revenue left after deducting the business expenses and tax liabilities. This profit is ref […]

Analyze how cash flows directly inform business project decisions by considering types of cash flows, costs, and stand-alone principles. However, to be able to qualify for this kind of tax shield, as a taxpayer you will have to itemize deductions on your tax returns. Another qualification is that there must be an approved organization receiving the donations. Tax shield for an individual is beneficial when you want to buy a home, using a mortgage or a loan. This is because the mortgages interes […]

Analyzing the contribution margin helps managers make several types of decisions, from whether to add or subtract a product line to how to price a product or service to how to structure sales commissions. Before making any major business decision, you should look at other profit measures as well. As a reminder, fixed costs are business costs that remain the same, no matter how many of your product or services you produce — for example, rent and administrative salaries. Variable costs are those […]

In January 2018, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. He elected a $5,000 section 179 deduction for the property and also elected not to claim a special depreciation allowance. In 2020, he used the property 40% for business and 60% for personal use. Instead of using the above rules, you can elect, for depreciation purposes, to treat the adjusted basis of the exchanged or involuntarily converted property as if disposed of (more&h […]

Keep in mind that in some countries such as Brazil, there are some specific sales taxes that hits the P&L statement. That happens because taxes are deducted directly from the revenue source, and because of that, instead of using Revenue, you should use Net Revenue . Cost of goods sold, or COGS, for SaaS companies seems like it should be a straightforward topic but there are a number of different conflicting reports online. Worst of all, EBITDA (more…) […]

Governments use the term revenue to describe the money they collect from taxes, fees, fines, and publicly-operated services. According to the calculation above, Tom’s net sales revenue for June was $3,442.18. The partial income statement displays how different types of revenue are recorded. The results of the calculation indicate that your sales revenue for May was $30,000. The portion of sales revenue paid directly from the customer to you. (more…) […]

Gross sales include any sales transactions that generate revenue and exclude all costs, expenses and other charges. Gross sales are generally only significant to companies that operate in the consumer retail industry, reflecting the amount of a product that a business sells relative to its major competitors. A company may decide to present gross sales, deductions and net sales on different lines within an income statement.

These figures must be watched over a moderate period of time to make an […]

Ideally, you’d prefer zero returns, allowances, and discounts, but this isn’t always possible. Therefore, you should monitor these figures to flag negative trends, so you can take immediate action. How can you calculate sales volume variance and what does it mean to your business? In this guide we explain what factors can impact sales volume variance and the formulae you need to measure it. If the gap between the gross sales and net sales is decreasing, that means the rate of (more& […]

The property is 5-year property with a fair market value of $10,000. Her business use of the property was 50% in 2019 and 90% in 2020. She paid rent of $3,600 for 2019, of which $3,240 is deductible. The $147 is the sum of Amount A and Amount B. Amount A is $147 ($10,000 × 70% × 2.1%), the product of the fair market value, the average business use for 2019 and 2020, and the applicable percentage for year 1 from Table A-19. You are considered regularly engaged in the business of lea […]