Tax Accounting Principles: Corporate and Partnership Transactions
Exam 1:
(Extensions → 6 months for everyone)
Chapter 2: Statute of Limitations–
1. Normal → 3 years from later of original due date or date filled 2. Omission of > 25% of gross income → 6 years 3. Fraud and/or failure to file → indefinite Trial courts and where appeals go–
1. Must go through the process (Revenue Agent’s Report (RAR), 30-day letter, informal appeal, and 90-day letter) before going to court 2. The tax deficiency must be paid prior to filing in the Court of Federal Claims
Inventory Valuation and Receivables Accounting
Allowance Method for Uncollectible Accounts
We use the Allowance Method to record estimated uncollectible accounts, which is used to estimate and record expected bad debts. This method ensures that Accounts Receivable (A/R) is stated at Net Realizable Value (NRV) and matches bad debt expense with the related sales revenue.
- Adjusting Entry: Updates the allowance balance to the target ending balance (usually a percentage of A/R or based on an aging schedule).
- Write-Off: Removes a specific A/R from the
Managerial Accounting Formulas: Variance, CVP, ROI & Decisions
Direct Materials and Labor Variances
Direct Materials and Labor:
Materials Price Variance = (AP – SP) x AQ
Materials Quantity Variance = (AQ – SQ) x SP
Materials Spending Variance = MPV + MQV
Labor Rate Variance = (AR – SR) x AH
Labor Efficiency Variance = (AH – SH) x SR
Labor Spending Variance = LRV + LEV
Standard Hours and Standard Cost
Standard Hours and Cost:
Standard Hours Allowed = standard hours per unit x actual output
Standard cost allowed = SQ x SP or SH x SR
Variable and Fixed Overhead Variances
Variable
Principles of Flight
A Trial Balance is a financial report that lists the names and balances of all the accounts in the general ledger of a business at a specific point in time. Its primary purpose is to verify the mathematical accuracy of the double-entry bookkeeping system by ensuring that the total of all the Debit balances equals the total of all the Credit balances.
📝 Errors Revealed by the Trial Balance -Errors that cause the total of the debit column to be unequal to the total of the credit column are revealed
Manufacturing Income Statement: COGS and COGM Calculation
Manufacturing Income Statement Complexity
The Income Statement for a manufacturing company is the most complex of all business types because it must accurately track and allocate the costs of converting raw materials into finished goods.
The core complexity lies in the calculation of the Cost of Goods Sold (COGS), which requires the use of several schedules to move costs through three different inventory accounts: Raw Materials, Work-in-Process (WIP), and Finished Goods.
Key Distinguishing Feature:
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Accounting Concepts and Conventions – 20
Accounting is called the language of business. To ensure that financial statements are prepared in a meaningful and uniform manner, accountants follow certain basic rules, assumptions, and principles. These are known as Accounting Concepts and Conventions. They provide a framework within which accounts are prepared so that they become reliable, comparable, and understandable for users.
Part I: Accounting Concepts
Accounting concepts are basic assumptions on
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