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Bookkeeping

26 Dec

Cash vs Accrual Accounting: Differences Explained

That means it does a better job than cash basis accounting of matching expenses and revenue to the correct time period in which they were incurred. It also produces a more complete balance sheet that factors in accounts payable, accounts receivable, current assets such as inventory, fixed assets and liabilities like loans. With accrual accounting, revenue is recognized when it’s earned, regardless of when payment is received. One surprising fact is that businesses using cash basis accounting may struggle to [...]

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25 Dec

Accrual vs Cash-basis Accounting Comparing Accounting Methods

All money earned by employees shows up in that account, which is a liability on the balance sheet. Most small businesses with payroll use accrual accounting, since payroll has both an accrued account and an expense account. Many businesses prefer cash-basis accounting for taxes because it can make it easier to maintain enough cash to pay taxes. However, the accrual system may be better for complete accuracy regarding yearly revenue. In both scenarios, cash basis accounting acknowledges revenue only when [...]

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07 Dec

How To Fill Out Form 1065: Overview and Instructions

If the partnership has a cost of goods sold deduction, complete and attach Form 1125-A. Enter on Form 1065, page 1,line 2, the amount from Form 1125-A, line 8. Partnerships that qualify to use the nonaccrual-experience method (described earlier) should attach a statement showing total gross receipts, the amount not accrued as a result of the application of section 448(d)(5), and the net amount accrued. Any partnership that files Schedule M-3 must also complete and file Schedule C, [...]

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07 Dec

How To Fill Out IRS Tax Form 1065: Instructions to Complete Partnerships Form

SSTBs and PTPs cannot be aggregated with any other trade or business. So, if the aggregation box is checked, the SSTB and PTP boxes for that specific aggregated trade or business should not be checked. Dispositions of property with section 179 deductions (code L). Figure the amounts for lines 17d and 17e separately for oil and gas properties that aren’t geothermal deposits and for all properties that are geothermal deposits. Enter capital gain property contributions subject to the 30% AGI [...]

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16 Nov

Departmental Overhead Rate

In managerial accounting, as opposed to utilizing one overhead rate to designate the overhead costs, overhead costs can be all broken down by departments. Departmental overhead rates offer the flexibility to involve an alternate activity or cost driver for every department. Frequently, a few departments will depend vigorously on manual labor while others require more machinery. Direct labor hours can be important to certain departments yet machine hours could turn out better for other people. Departmental overhead rates are [...]

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16 Nov

How to Calculate Overhead Costs in 5 Steps

Analysis and benchmarking of departmental overhead rates is an effective method for measuring achievement. Correlations between contenders, as well as among different internal departments assist with disconnecting efforts that are adding value, and those that are obliterating enterprise value. This measurement can be particularly helpful when creating a budget since he’ll be able to estimate sales for the budget period and then calculate indirect expenses based on the overhead rate. This $4 per DLH rate would then be used to [...]

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15 Nov

How To Fill Out Form 1065: Overview and Instructions

If the partnership has a cost of goods sold deduction, complete and attach Form 1125-A. Enter on Form 1065, page 1,line 2, the amount from Form 1125-A, line 8. Partnerships that qualify to use the nonaccrual-experience method (described earlier) should attach a statement showing total gross receipts, the amount not accrued as a result of the application of section 448(d)(5), and the net amount accrued. Any partnership that files Schedule M-3 must also complete and file Schedule C, [...]

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14 Nov

How To Fill Out IRS Tax Form 1065: Instructions to Complete Partnerships Form

SSTBs and PTPs cannot be aggregated with any other trade or business. So, if the aggregation box is checked, the SSTB and PTP boxes for that specific aggregated trade or business should not be checked. Dispositions of property with section 179 deductions (code L). Figure the amounts for lines 17d and 17e separately for oil and gas properties that aren’t geothermal deposits and for all properties that are geothermal deposits. Enter capital gain property contributions subject to the 30% AGI [...]

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07 Nov

Salary Payable: Definition, Example, Journal Entry, and More

No journal entry is made at the beginning of June when the job is started. At the end of each month, the amount that has been earned during the month must be reported on the income statement. If the company earned $2,500 of the $4,000 in June, it must journalize this amount in an adjusting entry. At the end of each month, $500 of taxes expense has accumulated/accrued for the month. Before the adjusting entry, Accounts Receivable had a debit [...]

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07 Nov

Depreciation Units-of-Activity, Double-Declining-Balance DDB, Sum-of-the-Years-Digits

The formula determines the expense for the accounting period multiplied by the number of units produced. Depreciation is a crucial accounting concept that allocates the cost of an asset over its useful life. Various methods exist for calculating depreciation, and one such method is the Units of Activity Method. This method is particularly useful when an asset’s wear and tear is directly related to the number of units it produces or the hours it operates. To simplify these complex calculations, [...]

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