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What are Cash and Accrual Methods?

The cash and accrual methods are two primary accounting methods used to record revenue and expenses. They differ in how and when transactions are recognized in the financial statements: Cash Basis Accounting: Under the cash basis accounting method, revenue and expenses are recorded only when cash is received or paid out, respectively. Income is recognized when cash is received from customers, and expenses are recognized when cash is paid to suppliers, employees, etc. This Read more [...]
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What Is An Income Statement?

An income statement, also known as a profit and loss statement (P&L), is one of the three primary financial statements used to assess a company's financial performance over a specific period, usually a quarter or a year. The income statement summarizes the company's revenues, expenses, gains, and losses to determine its net income or net loss for the period. Here's a breakdown of the components of an income statement: Revenues: Revenues, also referred to as sales or income, represent Read more [...]
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What Is a Balance Sheet?

A balance sheet is one of the three primary financial statements used to assess a company's financial position at a specific point in time. It provides a snapshot of a company's assets, liabilities, and equity. The balance sheet follows the fundamental accounting equation: Assets = Liabilities + Equity Here's a breakdown of the components of a balance sheet: Assets: Assets represent what the company owns or controls and can include tangible assets (such as cash, inventory, property, plant, Read more [...]
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Keeping Vital Records Safe Can Make Disaster Recovery Easier

Natural disasters can strike without warning. Sometimes even the most diligent taxpayers are left without the important personal and financial records they need. People may need documentation for tax purposes, federal or state assistance programs or insurance claims. Here are some steps that can help them reconstruct their important records. Tax records: Taxpayers can get free federal tax return transcripts immediately using Get Transcript on IRS.gov. They can also order transcripts Read more [...]
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Tax Considerations For People Who Are Separating or Divorcing

When couples separate or divorce, the change in their relationship status affects their tax situation. The IRS considers a couple married for tax filing purposes until they get a final decree of divorce or separate maintenance. Update tax withholding: When a taxpayer divorces or separates, they usually need to update their proper tax withholding by filing with their employer a new Form W-4, Employee's Withholding Certificate. If they receive alimony, they may have to make estimated tax payments. Tax Read more [...]