4. Balance sheet

A balance sheet. The financial position of an accounting entity as of a specified moment in time is shown by a balance sheet. In fact, its formal name is statement of financial position.

More specifically, the balance sheet reports the assets and equities and liabilities (liabilities and owner’s equity) of the entity at the specified moment in time.

They consist of current assets of cash and accounts receivable and property, plant, and equipment consisting of delivery equipment and office equipment. Current assets consist of cash and other short-lived assets reasonably expected to be converted into cash or to be consumed or used up in the operations of the business within a short period, usually one year. Property, plant, and equipment refers to relatively long-lived assets that are to be used in the production or sale of other assets or services rather hen being sold.

Liabilities are the debts owed by a firm. Typically, they must be paid at certain known moments in time. Short-lived current liabilities consist of accounts payable and notes payable. Long-terms liabilities are such long-term liabilities could include mortgages or bonds due in periods beyond one year.

5. Income statement.

Income statement is one of the financial statements of a company and shows the company’s revenues and expenses during a particular period. It indicates how the revenues (money received from the sale of products and services before expenses are taken out, also known as the “top line”) are transformed into the net income (the result after all revenues and expenses have been accounted for, also known as “net profit” or the “bottom line”). It displays the revenues recognized for a specific period, and the cost and expenses charged against these revenues, including write-offs (e.g., depreciation and amortization of various assets) and taxes. The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported.

One important thing to remember about an income statement is that it represents a period of time like the cash flow statement. This contrasts with the balance sheet, which represents a single moment in time.

6. Tax accounting

Tax accounting is an accounting technique used to organize financial statements for tax purposes. Tax accounting is the branch of accounting that involves determining the correct liability- that is, the amount owed – for taxes, and preparing the necessary tax-return forms.

Accounting is concerned, it is the branch of accounting that involves determining the correct liability - that is, the amount owed - for taxes, and preparing the necessary tax-return forms.

Individual proprietorship. The owners of these businesses therefore pay the progressive income tax rate for individuals on their business income. A progressive income tax is one that charges a higher rate for higher earnings.

Corporations are subject to a tax on their profits, while the stockholders of a corporation are also taxed at the individual rates on the dividends they receive from these profit. The corporation is not allowed a deduction for the dividends it pays out when its taxable income is computed. This results in double taxation of the corporation’s income.

Partnership can save a great deal in taxes by being taxed.