Bookkeeping

Contra Asset Account Definition, Examples, List of Accounts

admin2024-09-23T17:27:23+02:00

When a contra asset transaction is created, the offset is a charge to the income statement, which reduces profits. Contra revenue is a general ledger account with a debit balance that reduces the normal credit balance of a standard revenue account to present the net value of sales generated by a business on its income statement. Examples of revenue contra accounts are Sales Discounts, Returns and Allowances. However, the http://dancelib.ru/baletenc/item/f00/s02/e0002975/index.shtml “Allowance for Doubtful Accounts” (or “Allowance for Uncollectible Accounts”) is a contra account related to the concept of bad debts. This contra-asset account reduces the accounts receivable balance on the balance sheet to its net realizable value. The Allowance for Doubtful Accounts carries a credit balance that reduces the total amount of accounts receivable to show the amount that the company expects to collect. What Is a Contra Account? The difference between an asset's account balance and the contra account balance is...

How to enter and calculate the qualified business income deduction, section 199A, in ProSeries

admin2024-10-02T08:56:41+02:00

In general, losses and deductions incurred prior to 2018 are not qualified losses or deductions and are not included in QBI in the year they are included in calculating taxable income. Losses or deductions from a qualified trade or business that are suspended by other provisions of the Internal Revenue Code are not qualified losses or deductions and, therefore, are not included in your QBI for the year. Such Code provisions include, but aren’t limited to, sections 163(j), 179, 461(l), 465, 469, 704(d), and 1366(d). Instead, qualified losses and deductions are taken into account in the tax year they’re included in calculating your taxable income. The deductible QBI amount after the wage and capital limitation is the deductible QBI amount calculated as if no wage or capital limitation applied ($51,000) less the reduction ratio of 0.15 × the excess amount of $17,000 ($2,550), or $48,450. Because the taxpayers have...

LIFO Reserve Meaning and How to Calculate It

admin2024-09-13T03:20:45+02:00

In order to create a balance between the two methods and to give a fuller picture of a company’s financial realities, the LIFO reserve account is necessary. If a company uses a LIFO valuation when it files taxes, it must also use LIFO when it reports financial results to its shareholders, which lowers its net income. Last in, first out (LIFO) is a method used to account for business inventory that records the most recently produced items in a series as the ones that are sold first. That is, the cost of the most recent products purchased or produced is the first to be expensed as cost of goods sold (COGS), while the cost of older products, which is often lower, will be reported as inventory. In other words, the LIFO reserve is critical because it ultimately offers the most accurate and most complete picture of a company’s inventory, sales, revenue,...