Objectives of Accounting System. Timely and accurate picture of performance Generate financial reports for management, lenders, creditors Facilitate filing of tax returns (sales and payroll taxes more important than income tax) Prevent and detect fraud, waste and theft.
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Beg. A/R 20,000 -
Sales for month 120,000 120,000
Ending A/R (40,000) -
Reported Sales 100,000 120,000
Sales 500,000 500,000
Other exp. (480,000) (480,000)
Depr. ( 2,000)
Sec. 179 (10,000)
Net Income 18,000 10,000
Inventory Value in Yr. 1 $ 1,000,000
FIFO value in 10 years
(1.05)10 x 1,000,000 1,628,900
Tax Rate 40%
Cumulative Tax Deferral $ 251,560
Don’t get behind on payroll taxes!
Tax Form Rate
Sales Tax State 7% (NY)
FUTA 940 0.8%
Type of Level of Est. Est.
Report Assurance Cost Loan Size
Audit Positive Expen. $1 mill +
Review Limited 1/2 audit < $1 mill.
Compilation None Minimal < $200k