Write if the statement is C if the statement is Correct and I if the statement is Incorrect. Write your answer on the space provided before each item. 1. Gross revenue from a trading merchandising business is calculated as gross sales deduct sales costs. 2. Costs of Sales calculated as beginning inventory + net purchases-ending inventory 3. A business may, at the same time, deduct both the itemized deductions and the optional standard deduction from its gross income.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Write if the statement is C if the statement is Correct and I if the
statement is Incorrect.
Write your answer on the space provided before each item.
1. Gross revenue from a trading merchandising business is
calculated as gross sales deduct sales costs.
2. Costs of Sales calculated as beginning inventory + net
purchases-ending inventory
3. A business may, at the same time, deduct both the itemized
deductions and the optional standard deduction from its gross
income.
4. Personal expenses of the sole proprietor shall be allowed as
deductions from gross business income.
5. In the year 2018, a sole proprietor acquired a vehicle for
business use. The business is not allowed to deduct the
acquisition cost of the vehicle for tax purposes. Still, it is allowed
to deduct its
6. The optional standard deduction should be computed as 10%
of net sales.
7. An employee earning compensation income is exempt from
filing an income tax return if the employer has rightly withheld
his or her income tax.
8. Business income earners are only required to file an income tax
return if their taxable income exceeds P250,000.
9. An individual earning mixed-income is exempt from tax on his
or her income from the business but not on his or her income
from compensation.
10.A business income earner whose gross sales or gross receipts
and other non-operating income do not exceed P3M has the
at the optional 8% tax on gross sales/receipts and other nonoperating income
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