ACCOUNTING & TAX TERMS
ACCOUNTING: Recording and reporting of financial transactions, including the origination of the transaction, its recognition, processing, and summarization. Financial statements are prepared in the form of a balance sheet and profit and loss to summarize these transactions. For accounting to be useful it must be timely.
A period designated for the process to measure business transactions and transform the measurements into financial for a measure of time.
Accounting Principles Board (APB)
Senior technical committee of the AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) which issued pronouncements on accounting principles from 1959-1973. The APB was replaced by the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB).
Accounts Payable Subsidiary Ledger
A financial record of all individual accounts called creditors that a business owes. The ledger is seperate from the General Ledger and provide the details on all vendors
and represented by one account in the general ledger called Account Payable Control.
Accounts Receivable Turnover
Used to measure a company’s ability to collect cash from credit customers. Formula: divide net sales by average net account receivable balance.
The recognition of an expense or revenue item that has occurred but has not yet been recorded in the books of account. The expense is not yet paid and the revenue is not yet received.
The attempt to record the financial effects of transactions and other events in the periods in which those transactions or events occur rather than only in the periods in which cash is received or paid by the business,
Method of ACCOUNTING that recognizes REVENUE when earned, rather than when collected. Expenses are recognized when incurred rather than when paid.
An expense that has occurred but is not recognized in the accounts because it has not been paid as at the end of the accounting period..
Total DEPRECIATION pertaining to an ASSET or group of assets from the time the assets were placed in services until the date of the financial statements or tax return.
Profits that are not paid out as DIVIDENDS but are instead added to the company’s capital base. Companies do this to reserve cash for future expenditure.
Income Tax Returns Preparation for small business and individuals
DONE BY AN ENROLLED AGENT
Enrolled Agent (or EA) is not an employee or contractor of the IRS but is an individual who is a federally authorized tax practitioner empowered by the U.S. Department of the Treasury. Enrolled Agents represent taxpayers before the Internal Revenue Service (IRS) for tax issues including audits, collections and appeals.
Enrolled agent status is the highest credential awarded by the IRS. The EA credential is recognized across all 50 U.S. states. Attorneys and certified public accountants (CPAs) are licensed on a state by state basis, and are also empowered by the Department of the Treasury to represent taxpayers before the IRS.
IRS INFORMATION ON ENROLLED AGENTS
"An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee. Enrolled agent status is the highest credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72 hours of continuing education courses every three years.
Get to Know the Taxpayer Bill of Rights – Part 1
This is the first tip in a two-part summary of the rights granted to all taxpayers.
Every taxpayer has rights. The Taxpayer Bill of Rights takes these rights from the tax code and groups them into 10 categories. Taxpayers interacting with the IRS should know their rights, which are highlighted in Publication 1, Your Rights as a Taxpayer.
The Right to Be Informed. Taxpayers have the right to know how to comply with tax laws. They are entitled to clear explanations of the laws and IRS procedures. Taxpayers have the right to know about IRS decisions affecting their accounts with clear explanations of the outcomes.
The Right to Quality Service. Taxpayers have the right to receive prompt, courteous and professional assistance when dealing with the IRS. They also have the right to speak with a supervisor about inadequate service. Communications from the IRS should be clear and easy to understand.
The Right to Pay No More Than the Correct Amount of Tax. Taxpayers must pay only the amount of tax legally due. This includes interest and penalties. The IRS must apply all tax payments properly.
The Right to Challenge the IRS’s Position and Be Heard. Taxpayers have the right to object to formal IRS actions or proposed actions. They can also provide justification with additional documentation. Taxpayers can expect the IRS to consider timely objections and documentation promptly and fairly. Taxpayers can expect a response when the IRS disagrees with the taxpayer’s position.
The Right to Appeal an IRS Decision in an Independent Forum. Taxpayers are entitled to a fair and impartial appeal of most IRS decisions. This includes appealing certain penalties. Taxpayers have the right to receive a written response regarding a decision from the IRS. Taxpayers generally have the right to take their case to court.
The IRS will include Publication 1 when sending a notice on a range of issues, such as an audit or collection matter. Publication 1 is available in English and Spanish. All IRS facilities publicly display the rights for taxpayers.
What the Taxpayer Bill of Rights Means for You
IR-2014-72, IRS Adopts "Taxpayer Bill of Rights;" 10 Provisions to be Highlighted on IRS.gov, in Publication 1
IR-2014-80, IRS "Taxpayer Bill of Rights" Now Available in 6 Languages; 10 Key Rights Outlined in Updated Publication 1
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