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Why are partners salaries charged in the appropriation account?
Partners' salaries are charged in the appropriation account because they represent a distribution of profits rather than an operational expense. This allocation ensures that the partners are compensated for their contributions to the business while maintaining transparency in profit-sharing. By including these salaries in the appropriation account, it provides a clear picture of how profits are allocated among partners after accounting for all expenses. This practice also helps in determining the net profit available for distribution.
Do you have to use the same depreciation for accounting and tax?
Tax department has developed theire own depreciation schedules for different assets class and use their own depreciations rather than using accounting depreciation and due to this accounting depreciation difference there is also difference in tax we pay and tax we calculate and called "Deffered Taxation"
Is stock pallets fixed assets?
Stock pallets are typically considered current assets rather than fixed assets. Fixed assets are long-term resources, such as buildings and machinery, used in operations, while stock pallets are often used for inventory storage and handling and are usually not intended for long-term use. However, if the pallets are owned and have a significant useful life, they could be classified as fixed assets in some accounting practices.
Are lease obligations financial or real assets?
Lease obligations are considered financial assets or liabilities, not real assets. They represent a contractual obligation to pay for the use of an asset over time, such as property or equipment, rather than ownership of a physical asset itself. In accounting, lease obligations are recorded as liabilities on the balance sheet, reflecting the future payment commitments of the lessee.
Why the assets and laibilities sides of balance sheet is equal?
Accounting is based on the formula of Assets = Liabilities + Owner's Equity. the DR side of a balance sheet are the Assets while the CR side records Liabilities & Owner's Equity. Hence for the formula to be effective, both side of the balance sheet must be equal (balance). PS: It's not the asset and liabilities side but rather the Debit and Credit side.
Cash flows more important than profits?
1. Why are we interested in cash flows rather than accounting profits in determining the value of an asset?
Why are you interested in cash flows rather than accounting profits in determining the value of an asset?
because that is what is being used
Why are we interested in Cash flow rather than accounting profits in determining the value of assets?
We focus on cash flow rather than accounting profits when determining the value of assets because cash flow provides a clearer picture of a company's actual financial health and liquidity. Unlike accounting profits, which can be influenced by non-cash items like depreciation and accounting policies, cash flow reflects the real cash that a business generates and can use for operations, investments, and debt repayment. This makes cash flow a more reliable indicator of a company's ability to sustain and grow its value over time. Ultimately, investors and analysts prioritize cash flow for its direct impact on a firm's financial viability and potential returns.
Why are partners salaries charged in the appropriation account?
Partners' salaries are charged in the appropriation account because they represent a distribution of profits rather than an operational expense. This allocation ensures that the partners are compensated for their contributions to the business while maintaining transparency in profit-sharing. By including these salaries in the appropriation account, it provides a clear picture of how profits are allocated among partners after accounting for all expenses. This practice also helps in determining the net profit available for distribution.
Do you have to use the same depreciation for accounting and tax?
Tax department has developed theire own depreciation schedules for different assets class and use their own depreciations rather than using accounting depreciation and due to this accounting depreciation difference there is also difference in tax we pay and tax we calculate and called "Deffered Taxation"
What fund accounting?
Fund accounting is the accounting system emphasizing on accountability rather than profitability
Is stock pallets fixed assets?
Stock pallets are typically considered current assets rather than fixed assets. Fixed assets are long-term resources, such as buildings and machinery, used in operations, while stock pallets are often used for inventory storage and handling and are usually not intended for long-term use. However, if the pallets are owned and have a significant useful life, they could be classified as fixed assets in some accounting practices.
Are lease obligations financial or real assets?
Lease obligations are considered financial assets or liabilities, not real assets. They represent a contractual obligation to pay for the use of an asset over time, such as property or equipment, rather than ownership of a physical asset itself. In accounting, lease obligations are recorded as liabilities on the balance sheet, reflecting the future payment commitments of the lessee.
What is the meaning of 'historical cost accounting'?
Historical cost accounting is an accounting concept that states that all assets in the financial statement should be reported based on their original cost . Example : James buys a building for $2,000,000 ten years ago, the value of the building now is $3,000,000 but in James's accounting records, the building is still recorded as $2,000,000 (less depreciation). No account is taken of the increase in value.
What is the cost principle?
The cost principle is an accounting guideline that states that assets should be recorded based on the actual amount paid for them, rather than their market value or potential future value. This principle helps ensure that financial statements are reliable and reflects the actual cost incurred by a company to acquire its assets.
Why the assets and laibilities sides of balance sheet is equal?
Accounting is based on the formula of Assets = Liabilities + Owner's Equity. the DR side of a balance sheet are the Assets while the CR side records Liabilities & Owner's Equity. Hence for the formula to be effective, both side of the balance sheet must be equal (balance). PS: It's not the asset and liabilities side but rather the Debit and Credit side.
Why is accounting described as a service activity?
Accounting services is mostly provided by certified accountants. Many organizations stay busy in generation profits and have no time to concentrate on their company's finances. For such situation, accounting companies in Dubai such as Flyingcolourtax come forward to give a helping hand by offering outsourced accounting services in Dubai. If you're looking for any kind of expert accounting services then contact Flyingcolourtax by visiting the link mentioned below: " www . flyingcolourtax . com "
