Muhammad Qureshi Jeff Nowakowski Phase II: Southwest Current Assets: Accounts Receivables a. Analyzing Receivables: There is limited information about the bad debt expense or the allowance for doubtful accounts on Southwest’s 10k. According to the 10k, accounts receivables are carried at cost and the allowance for doubtful accounts was immaterial so the company did not provide figures for the account. The largest source of accounts receivable for Southwest is credit cards companies. These receivables are associated with ticket sales for future travel and amounts from business partners involved in firm’s frequent flyer programs. The fact that Southwest was not required to disclose actual figures on their allowance for doubtful accounts and bad debt expense because of their immateriality indicates that the company does very well with collecting their receivables.
• Income Taxes – being a sole proprietor gives the individual the option to file taxes under a separate employer identification number. The other option is to file their return normally and just fill out an IRS Schedule C to show profit or loss for the business (Smith, 2011). • Longevity/Continuity – One of the main issues of longevity in regards to sole proprietorship is that it dissolves when the owner dies so it makes it not possible to have continuity (Joseph, 2011). • Control – one of the great advantages of sole proprietorship that a person doesn’t have with a partnership or corporation is that you don’t have to answer to anyone but yourself in our decisions. You have
Nonprofits are allowed to make a profit but it can only be used for the operation of the organization. When a nonprofit organization goes out of business its liquidated assets proceeds are given to another nonprofit organization whereas in a profit organization the liquidated assets proceeds are split among the shareholders and owners. . (Fritz, 2013) Not-for-profit hospitals are organized under the Section 501 (c)(3) of the Internal Revenue Service (IRS) tax code, and as such, are exempt from federal and state taxes and generally from local property and other taxes. Not-for-profit hospitals also have access to tax-exempt bond financing and have tax-deductible status for gifts and contributions (Barton, 2010) According to Heleni Smith private hospitals can classify as profit or non-profit, however nonprofit makes up the majority of hospitals in the United States.
According to "Accrual" (2012),” Cash-basis accounting does not recognize promise to pay or expectations to receive money or service in the future, such as payables, receivables, and prepaid expenses”. Cash basis accounting is a simple and inexpensive method to implement and utilize. Small business owners without a strong accounting background often use cash basis accounting. Even though, both cash basis accounting and accrual basis accounting are approved accounting methods for tax purposes, only accrual basis accounting is generally accepted accounting principles (GAAP). Generally accepted accounting principles requires certain companies to use the accrual basis accounting to
Specifically he would like to deduct it other than as a miscellaneous itemized deduction, which would give him no tax benefit due to the Alternative Minimum Tax. Discussion and conclusion: Since Joshua’s damage award is considered part of his gross income, the concern is whether he can deduct the contingency- based attorneys fees. If the damage incurred in connection with a trade or business, than he would be able to deduct this expense on schedule C, assuming he is self-employed. Or he can deduct it as a miscellaneous itemized deduction; due to the fact that he is subject to the
Proprietorship has three important advantages: it is easily and inexpensively formed; its subject to few government regulations and; its income is not subject to corporate taxation but is taxed as a part of the proprietor’s income. Limitations include: difficulty obtaining capital needed for growth; having an unlimited personal liability for business debts can result in losses that exceed the money invested in the company and; life of a proprietorship is limited to life of its founder. For these reasons sole proprietorship is used mainly for small businesses. A partnership exists when there are two or more persons or entities associate to conduct non-corporate business for profit. Partnership agreements define the ways that any profits and losses are shared between partners.
They are not allowed to be academically selective. Free schools can be set up, on a non-profit basis, by charities, parent groups, businesses or other such groups. *
Taxpayer requested a letter ruling on whether or not the discounts received constitute as constructive dividends received. The IRS indeed ruled the discounts received by the taxpayer constituted as constructive dividends under section 316 and the distribution applied to section 301. A constructive dividend is a form of payment made by a corporation to its shareholders that resulted in any measurable economic benefits to the shareholder. It can either be a direct or an indirect form of payment and mostly occurs in closely held corporations. These payments can also be distributed both advertently and inadvertently.
| Deferrals are income items taxpayers realize in one year but include in gross income in a subsequent year. | | Exclusions are favorable because taxpayers never pay tax on income that is excluded. | | Interest income from municipal bonds is excluded from gross income. | | An income item need not be realized in order to qualify as an exclusion item. | MC Qu.
Firstly, GDP does not include output that is not recorded or under-recorded. In countries there are many economic activities that are no officially recorded such as a person’s own work in repairing his own house, or food grown by a person and consumed by his family. Similarly, it does not include any work of charity done by a person, which helps to make a better society. Secondly, GDP does not include external costs such as the costs to the environment of using resources (cutting trees, drilling oil) or the cost of pollution. These worsen the health of people, but are not included in GDP.