Learn common accounting terms

Employer payroll taxes incurred as a product cost would be included in direct or indirect labor costs and recorded as an expense through cost of goods sold. A form of business ownership in which two or more individuals and/or organizations share in the ownership of all of the business assets, liabilities and profits or losses. Partnerships can be formed verbally, although a written partnership agreement spelling out the roles, responsibilities and rights of the partners is highly recommended. A major disadvantage of the partnership form is the lack of any separate legal liability between the business and the partners. This means that if claims exist against the business and the business has insufficient resources to satisfy those claims, the personal assets of the partners may be taken to satisfy those claims. This can be avoided through alternative partnership forms such as an LLP. Instead, all partnership profits and losses are allocated to the partners for inclusion on their personal income tax returns in proportion to their partnership interests.

General ledger (G/L) is the primary, authoritative record of a construction company’s financial transactions. The G/L is made up of various accounts that each track and “hold” particular values as an amount called a balance. Examples of accounts include commercial revenue, direct labor expenses,accounts receivableand accrued payroll taxes. Equity on abalance sheetis what the owners of a construction company have invested in the business.

Prepaid expense

May cause thelossof tax deductions under Section 162 , the deduction that public companies take for compensation to chief executive officer and next four highest compensated officers is limited to $1 million each. However, discounted options do not qualify as performance based compensation and therefore the deduction that the company would get may be partially or completely lost. In addition discounted stock options do not qualify for Incentive Stock option treatment.

Learn common accounting terms

Its members are 143 professional accounting bodies in 104 countries. Movement from public ownership to private ownership of a COMPANY’s shares either by the company’s repurchase of shares or throughpurchasesby an outside private investor. A U.S. taxpayer that pays or accruesincometax to a foreign country may elect tocreditor deduct these taxes in a determinable us dollar amount. This is usually done on the annual individual taxreturnand there is s specific form provided for this.

Introduction to Basic Accounting Terminology

A submission by a potential customer or vendor proposing to buy or sell goods or services. Payroll is a list of employees and the hourly wage or salary they are to be paid. Payroll also refers Learn common accounting terms to the entire process by which employers pay their employees. Net refers to the length of time a customer has to pay a bill before its due date, which in this case would be 30 days.

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