The net amount of accounts receivable outstanding does not change when this entry is completed. The method does not involve a reduction in the amount of recorded sales, only the increase of the bad debt expense. For example, a business records a sale on credit of $10,000, and records it with a debit to the…
The most important thing to remember when working with the allowance methods for bad debt is to know what you have calculated! Once you figure a dollar amount, ask yourself if that amount is the bad debt expense or the allowance. If it is the allowance, you must then figure out how much bad debt…
With accrual accounting, a company records income when completing a service or delivering goods rather than when payment is received. Transactions can be more complex in the accounting world because businesses may make a deal today that won’t be settled until a future date. Or, they may have revenues or expenses that are known but not yet…
For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience…
For companies, the tax implications of paying dividends can also be significant. While dividends are not tax-deductible expenses, meaning they do not reduce the company’s taxable income, they can influence the company’s overall tax strategy. For example, companies may choose to retain https://psyhology-perm.ru/Rez.htm earnings and reinvest them in the business to defer taxes, rather than…
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