The total of all debit entries therefore always equal to the total of all credit entries. This is a very important fact and is called the golden rule of accounting – debits must always equal credits. The above examples show contra asset accounts, but there are also examples of contra liability accounts and contra expense […]
The second type is the revenue accrual which refers to the reporting of a transaction that occurred as revenue and the asset that it occurred against. These revenues are reported during the period they were earned, which means this is before the money was received or the invoice was processed. According to Investopedia, deferred revenue […]
It is primarily used in its most literal sense by businesses seeking to account for unpaid loan obligations, unpaid receivables, or losses on stored inventory. Generally, it can also be referred to broadly as something that helps to lower an annual tax bill. It would still be better if the bad debt expenses are booked […]
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If the company receives a $12,000 trade‐in allowance, a gain of $2,000 occurs. If your total acquisitions are greater than $2,620,000 the maximum deduction begins to be phased out. The first step in determining your depreciation deduction is to determine the depreciable basis of the asset. Different rules apply depending upon how you acquired …
Amortization is important because it helps businesses and investors understand and forecast their costs over time. In the context of loan repayment, amortization schedules provide clarity into what portion of a loan payment consists of interest versus principal. This can be useful for purposes such as deducting interest payments for tax …