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What are some examples of items that cause deferred tax assets or deferred tax liabilities?
Wiki User
∙ 15y ago
m;l
Wiki User
∙ 15y ago
Examples of items that can cause deferred tax assets include net operating loss carryforwards, tax credits, and deductible temporary differences such as depreciation or bad debt expense. Examples of items that can cause deferred tax liabilities include taxable temporary differences such as accelerated depreciation or prepaid revenues. Additionally, changes in tax rates can also give rise to deferred tax liabilities or assets.
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What causes stockholder equity to change?
Remember that in accounting, the Mother of All Equations is: Assets - Liabilities = Stockholders' Equity Anything that increases or decreases your assets or liabilities is going to cause your Stockholders' Equity to change as well.
What is the difference between gross working capital and net working capital?
Gross working capital is sum of current assests of a company and does not account for current liabilities. However, Net working capital is difference of Current assets and current liabilities. Net working capital = Current Assets - Current LiabilitiesA change in the total amount of current assets without a change of the amount in current liabilities will result to a change in the amount of net working capital. Similarly, a change in the total amount of current liabilities without an identical change in the total amount of current assets will cause a change in the net working capital.
Can a perianal abscess cause deferred pain?
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3 factors that cause loss in value of tangible assets?
Which two factors cause the loss in value of tangible assets
State the accounting equation explain?
The 'basic accounting equation' is the foundation for the double-entry bookkeeping system. For each transaction, the total debits equal the total credits.[1]In a corporation, capital represents the stockholders' equity.Assets - Liabilities = (Shareholders' or Owners' Equity)[1]Now it shows owners' interest is equal to property (assets) minus debts (liabilities). Since in a corporation owners are shareholders, owner's interest is called shareholders' equity. Every accounting transaction affects at least one element of the equation, but always balances. Simplest transactions also include:[2]TransactionNumberAssetsLiabilitiesShareholder'sEquityExplanation1+6,000+6,000Issuing stocks for cash or other assets2+10,000+10,000Buying assets by borrowing money (taking a loan from a bank or simply buying on credit)3�900�900Selling assets for cash to pay off liabilities: both assets and liabilities are reduced4+1,000+400+600Buying assets by paying cash by shareholder's money (600) and by borrowing money (400)5+700+700Earning revenues6�200�200Paying expenses (e.g. rent or professional fees) or dividends7+100�100Recording expenses, but not paying them at the moment8�500�500Paying a debt that you owe9000Receiving cash for sale of an asset: one asset is exchanged for another; no change in assets or liabilitiesThese are some simple examples, but even the most complicated transactions can be recorded in a similar way. This equation is behind debits, credits, and journal entries.This equation is part of the transaction analysis model,[3] for which we also writeOwners equity = Contributed Capital + Retained EarningsRetained Earnings = Net Income � DividendsandNet Income = Income � ExpensesThe equation resulting from making these substitutions in the accounting equation may be referred to as the expandedaccounting equation, because it yields the breakdown of the equity component of the equation.[4]Expanded Accounting EquationAssets = Liabilities + Stockholders' EquityAssets = Liabilities + Common Stock + Retained EarningsAssets = Liabilities + Common Stock + Net Income - DividendsAssets = Liabilities + Common Stock + Income - Expenses - DividendsDefinition of 'Accounting Equation'The equation that is the foundation of double entry accounting. The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the company's shareholders. Thus, the accounting equation is: Assets = Liabilities + Shareholder Equity. The balance sheet is a complex display of this equation, showing that the total assets of a company are equal to the total of liabilities and shareholder equity. Any purchase or sale by an accounting equity has an equal effect on both sides of the equation, or offsetting effects on the same side of the equation. The accounting equation is also written as Liabilities = Assets - Shareholder Equity and Shareholder Equity = Assets - Liabilities.The accounting equation is Assets = Liabilities + Owner's Equity. This is the same format used in a sole proprietorship's balance sheet. (A corporation's balance sheet will use Stockholders' Equity instead of Owner's Equity.)The accounting equation will always remain in balance if double-entry accounting is followed accurately. For example, if a company borrows $10,000 from its bank, Assets increase by $10,000 and Liabilities increase by $10,000. When a company buys inventory with cash, one Asset (Inventory) increases and one Asset (Cash) decreases. If the owner invests $5,000 of personal assets in the business, the company's Assets increase and Owner's Equity increases. If the owner withdraws $2,000 from the business for her personal use, the company's Assets decrease and Owner's Equity decreases.Revenues causes Owner's Equity to increase, and expenses cause Owner's Equity to decrease. If the company earns $1,500 in service fees, the company's Assets (Cash or Accounts Receivable) will increase and Owner's Equity will increase. When the company incurs electricity charges, the company's Liabilities increase and Owner's Equity decreases. If the company pays for ads to appear in this week's newspaper, Assets decrease and Owner's Equity decreases.Bookkeepers and accountants will be entering amounts into two or more accounts for every transaction. This occurs with business accounting software as well, but the software might be doing part of the entries behind the scenes.From the large, multi-national corporation down to the corner beauty salon, every business transaction will have an effect on a company's financial position. The financial position of a company is measured by the following items:Assets (what it owns)Liabilities (what it owes to others)Owner's Equity (the difference between assets and liabilities)The accounting equation (or basic accounting equation) offers us a simple way to understand how these three amounts relate to each other. The accounting equation for a sole proprietorship is:Assets = Liabilities + Owner's EquityThe accounting equation for a corporation is:Assets = Liabilities + Stockholders' EquityAssets are a company's resources-things the company owns. Examples of assets include cash, accounts receivable, inventory, prepaid insurance, investments, land, buildings, equipment, and goodwill. From the accounting equation, we see that the amount of assets must equal the combined amount of liabilities plus owner's (or stockholders') equity.Liabilities are a company's obligations-amounts the company owes. Examples of liabilities include notes or loans payable, accounts payable, salaries and wages payable, interest payable, and income taxes payable (if the company is a regular corporation). Liabilities can be viewed in two ways:(1) as claims by creditors against the company's assets, and(2) a source-along with owner or stockholder equity-of the company's assets.Owner's equity or stockholders' equity is the amount left over after liabilities are deducted from assets:Assets - Liabilities = Owner's (or Stockholders') Equity.Owner's or stockholders' equity also reports the amounts invested into the company by the owners plus the cumulative net income of the company that has not been withdrawn or distributed to the owners.If a company keeps accurate records, the accounting equation will always be "in balance," meaning the left side should always equal the right side. The balance is maintained because every business transaction affects at least two of a company's accounts. For example, when a company borrows money from a bank, the company's assets will increase and its liabilities will increase by the same amount. When a company purchases inventory for cash, one asset will increase and one asset will decrease. Because there are two or more accounts affected by every transaction, the accounting system is referred to as double entry accounting.A company keeps track of all of its transactions by recording them in accounts in the company's general ledger. Each account in the general ledger is designated as to its type: asset, liability, owner's equity, revenue, expense, gain, or loss account.Balance Sheet and Income StatementThe balance sheet is also known as the statement of financial position and it reflects the accounting equation. The balance sheet reports a company's assets, liabilities, and owner's (or stockholders') equity at a specific point in time. Like the accounting equation, it shows that a company's total amount of assets equals the total amount of liabilities plus owner's (or stockholders') equity.The income statement is the financial statement that reports a company's revenues and expenses and the resulting net income. While the balance sheet is concerned with one pointin time, the income statement covers a time interval or period of time. The income statement will explain part of the change in the owner's or stockholders' equity during the time interval between two balance sheets.Definition and Explanation of Accounting Equation:Dual aspect may be stated as "for every debit, there is a credit." Every transaction should have twofold effect to the extent of the same amount. This concept has resulted in accounting equation which states that at any point of time the assets of any entity must be equal (in monetary terms) to the total of equities. In other words, for every business enterprise, the sum of the rights to the properties is equal to the sum of the properties owned. The properties of the businessare called "assets". The rights to the properties are called "equities". Equities may be sub-divided into two principle types: The rights oft he creditors and the rights of the owners. The equity of the creditors represents debts of the the business and are called liabilities. The equity of the owner is called capital, or proprietorship or owner's equity.The formula know as the accounting equation, thus arrived at is as follows:Assets = EquitiesORAssets = Liabilities + ProprietorshipAnother method of demonstrating the mathematical relationship involves a simple variation in the form of equation. Again it begins with the position that every business owns or has interest in certain assets. It also owes certain amounts to its creditors. The difference between what it owns and what it owes represents the owner's capital or proprietorship. Thus the original equation is changed into:Assets - Liabilities = ProprietorshipEffects of Transactions on the Accounting Equation:Each and every business transaction affects the elements of accounting equation. The effect is shown by the use of (+) or (-) placed against the elements affected. Note particularly that the equation remains in balance after each transaction.The three basic fundamentals of bookkeeping are assets, liabilities and owners' equity (capital). The assets represent the things of value that a business owns. The liabilities are the claims of the creditorsadjacent to those assets. The owner's equity (capital) is the claim of the owner against those assets. Whatever is not claimed by the creditors belongs to the owner. As a result, the total claims against the assets are always equal to the total assets, this equality between the assets and the liabilities and the owner's equity expressed by the "accounting equation".Assets = Liabilities + Owner's Equity.The two sides of the accounting equation must always be equal because the rights to all the assets of a business are owned by someone. The creditors have a claim against the assets of a business until the liabilities have been paid. The owner has a claim against the remaining assets of the business. If no liabilities exist, then the owner's equity will equal to the total assets.A clear understanding of the accounting equation is essential, because most of accounting systems based on it. The equation actually identifies the claims (or rights) against the assets held by a business. The two sides represent different versions of the same thing. The left side of the equation, assets, consists of the "resources" (properties) held by the business; the right side of the equation, equities (creditor's claim and owner's claim against the assets) consist of the "source".Resources = SourcesAssets = Claims against assetsIt should be remembered that the two sides of the equation are always equal because these two sides are merely two views of the same business resources.Accounting equation is an accounting term where a relation between assets, liabilities and equity is drawn and these are the main components of accounts as well.In accounting equation we say for every debit there is a credit means for every entry we look at two aspects.Means single entry but it has impact on two of the components of accounting equation.The equation is as follows.Assets = liabilities + equity.Now here if we look at any business it raises capital by two means either by investing himself or by taking some loan from some bank or another company.If a company takes some loan from a bank then this will also help in building up assets. These assets would be of same amount which the company would borrow and here we can easily understand that liabilities are equal to assets over here.Similarly if owner invests or injects his capital in the business totally then the assets created would be again equal to the equity side.But normally businesses generate capital from owner capital as well as from loans and both collectively make up the same amount of assets which also explain the accounting equation.Explaining Accounting EquationsPart of the Accounting Workbook For Dummies Cheat Sheet (UK Edition)Accounting equations can be tricky to remember, so this handy reference gives you everything you need to do your sums easily and, more importantly, correctly.Understanding liabilities and owners' equityLiabilities and owners' equity are the two basic types of claims on the assets of an entity. The two-sided nature of the accounting equation is the basis for double entry accounting that records both sides of the entity's transactions: what's received and what's given in the economic exchange.Assets = Liabilities + Owners' EquityKnowing the rules for debits and creditsHere is your handy, at-a-glance table to help you remember the rules for debits and credits in accounting. Keep it by your calculator and never get confused again!Financial effects of revenues and expensesAs you work your way through your accounting sums, remember the following simple accounting rule when it comes to calculating the financial effects of revenues and expenses:Revenue = Asset increase (debit) or Liability decrease (debit)Expense = Asset decrease (credit) or Liability increase (credit)
Do Incentives for political leaders can cause leaders to favor programs with immediate benefits and deferred costs?
true
What would be the effect of outstanding expense on accounting equation?
As we know, in accounting and book-keeping, expenses are debited in order to cause a decrease in the owner's (or stockholders') equity. So in this case, we record outstanding expense as: ASSETS = LIABILITES + CAPITAL Nil = +(outst. expense) - (outstanding expense) Outstanding Expenses are added to Liabilities because it is business' CURRENT LIABILITY and deducted from CAPITAL because it causes a decrease in owner's equity. NOTE: At the time of payment we deduct it from Liabilities as well as from Cash ( or in JOURNAL ENTRY: we debit Outstanding Expense and credit Cash) ASSETS = LIABILITES + CAPITAL -outst. exp. = -outst. exp. + Nil
The purchase of a truck with a down payment was recorded as a pure cash purchase this error would cause?
Liabilities were underrated
The purchase of a truck with a down payment was recorded as a pure cash purchasethis error would cause?
liabilities would be understated
What is fund flow analysis?
hat is a Fund? Fund Meaning Money that is set aside for a particular purpose. To provide money for paying off the interest or principal of (a debt). To finance, using long-term debt or Capital. Synonyms Finance Support Back Furnish Fund = Capital We use the phrase "We need additional funds" to mean we need additional capital whether be it for acquiring assets, clearing liabilities or for meeting expenses. This indicates that Fund means Capital. All capital of the organisation whether owned or loaned is capable of being called Fund. Fund is Capital freely available for use A Fund by its nature would be capital kept aside with a purpose. The fund should be capable of being used for the specified purpose at any time. Fund, in the topic Funds Flow Analysis, is a general purpose fund. It represents capital resource that would be available to the organisation for general purposes. It would be capable of being used in any manner the organisation prefers without any restriction/hindrance. Fund is Capital supported by Current Assets Every rupee of a liability/capital is supported by a rupee of an asset. Every rupee of an asset is financed by a rupee of a liability. Consider a new business that has been started with a capital of Rs. 2,00,000 brought in cash. The organisation's Balance Sheet immediately after this first transaction would be: Balance Sheet of M/s ___ as on 31st December __ Liabilities Amount Assets Amount Capital 2,00,000 Cash 2,00,000 2,00,000 2,00,000 Liabilities supported by Assets : Capital is supported by cash Assets financed by Liabilities : Cash is financed by Capital The next day, Furniture worth Rs. 1,00,000 and Stock Worth Rs. 50,000 have been bought for cash. The Balance Sheet after these transaction would be : Balance Sheet of M/s ___ as on 31st December __ Liabilities Amount Assets Amount Capital 2,00,000 Cash Furniture Stock 50,000 1,00,000 50,000 2,00,000 2,00,000 Liabilities supported by Assets : Capital is supported by Cash, Furniture and Stock Assets financed by Liabilities : Cash, Furniture and Stock are financed by Capital Capital/Cash is employed in purchasing Assets Since Cash used in purchasing Furniture was financed by Capital, we can say that Furniture is financed by Capital. Whereby, we say that capital is employed in purchasing furniture. On converting an asset into a new one, the liability that was being supported by the replaced asset would now be supported by the new asset. Therefore, on employing capital, the assets supporting capital change. Capital that can be employed To be able to employ capital for any purpose, the asset that is supporting it should be easily convertible. Fund is Capital supported by easily convertible Assets Fund is capital freely available for being used in any which way the organisation intends i.e. for long term or short term needs. To enable such usage, funds (capital that we call funds) should be supported not just by assets which are convertible but by assets that are easily convertible. Current Assets are easily convertible Current Meaning Belonging to the present time. Not overdue; occurring this period. Synonyms Present Existing Recent In Progress Current Assets are assets that are capable of being liquidated in a time span of a year or less. They represent easily convertible assets. Fund is capital supported by easily convertible assets + Current Assets are easily convertible assets. ? Fund is capital supported by Current Assets Funds exclude Current Liabilities Current Liabilities Current liabilities are liabilities that are to be repaid/cleared within the near future (a short period of time). Current liabilities are considered to be supported by current assets as they are similar in nature i.e. both of them have a short life span (a year or less). Current liabilities have a charge on current assets. Fund is capital that is freely available for use for any purpose the organisation intends without any hindrance/restriction. All the capital that is supported by current assets cannot be said to be freely available for use without any hindrance. We do not consider Current liabilities to be representing capital that is freely available for use, since they are to be repaid within a short time span Therefore, capital supported by current assets excluding current liabilities would only be considered as fund. Fund = Current Assets - Current Liabilities Fund is freely available capital + Fund is capital supported by Current Assets + Fund is capital supported by current assets excluding current liabilities [Current assets in excess of those supporting current liabilities support funds.] ? Funds = Current Assets - Current Liabilities Fund = Working Capital Excess of Current Assets over Current Liabilities is Working Capital ? Working Capital = Current Assets - Current Liabilities. ? Fund = Working Capital What is Funds Flow? Flow Meaning To move or run smoothly with unbroken continuity like in the case of a fluid. Something that resembles a flowing stream in moving continuously Synonyms Stream Gush Course Funds Flow Fund being working capital, Funds flow indicates the flow of working capital between two points of time. It involves information relating to the various transformations undergone by working capital (i.e. the changes that have taken place in working capital) during the period involved between the two points of time. Every change in working capital is associated with (or is on account of) a flow either an inflow or an outflow. Thus, funds flow involves information relating to the inflows and outflows that resulted in a change in working capital between the two points of time. When do we say that there is a flow of fund? Fund (Working Capital) in an Organisation is like water in a reservoir. The Fund is analogous to water and the reservoir to the organisation. There is a change whenever there is a flow There would be a change in fund (working capital) whenever there is a flow (in/out) of fund. An inflow would result in an increase and An outflow would result in a decrease. There is a flow whenever there is a change A change in fund (working capital) in the organisation is an indication of flow of fund. An increase would indicate an inflow and A decrease would indicate an outflow. Hidden/Masked flows When there is an inflow followed by an outflow of the same magnitude, there may not be a change in fund (working capital). An inflow would result in an increase in fund which would be set off by an outflow resulting in a decrease. Since the magnitude is the same, after the two transactions, the fund seems to be unchanged. In such situations, to notice the change, we will have to break down the transactions into two instead of viewing them in total.
Two examples of bacteria that cause disease?
Two examples of bacteria that cause disease include E. coli, and Mycobacterium tuberculosis.
Which of the following business transactions would cause a decrease both in assets and owner's equity?
a withdrawl
