Unit 4 Vocabulary: Tax Accounting vs GAAP

Noun (thing)
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Accrual basis accounting
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the method, of accounting, in which income and expenditure, are recorded at the date they are earned
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"From the accounting point of view, it doesn't matter when you actually receive the payment as I am using accrual basis accounting so I have already accounted for the invoice."
Verb (infinitive)
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Be consistent with
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in agreement with, in accordance with
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"Whichever method you use when accounting for tax, it is important to be consistent with the regulations in that method."
Noun (thing)
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Depreciation
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the method of allocating the cost of an asset over its useful life
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"The depreciation of the new machine will happen over 12 years."
Verb (infinitive)
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Expense
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show the full cost of something in the company
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"I don't expect that the new van will be worth anything after 12 months, so I decided to expense it in the accounts this year."
Noun (thing)
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Fixed asset
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an asset which is not consumed or sold during the normal course of business activities
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"The auditors checked through the list of fixed assets and made sure that all the machinery, vehicles and property listed really existed."
Noun (thing)
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GAAP (generally accepted accounting principles)
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the common set of standards and procedures used by companies when preparing financial statements
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"All accountants should have a firm understanding of GAAP, and follow the principles closely."
Noun (thing)
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Levy
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impose or collect
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"The government levies a higher tax on luxury goods, than on basic products."
Noun (thing)
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Net earnings
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a company's total revenue minus the operating expenses, depreciation, and interest paid and taxes
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"When the board reviewed the previous year's accounts they were pleased to see that the net earnings had increased."
Noun (thing)
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Omit
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exclude, leave out
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"When the company was audited, it was noticed that $12,000 of income had been omitted from the tax return."
Noun (thing)
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Public company
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a firm which is permitted to sell shares in the firm to the general public
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"After the merger Questcore became a public company and the value of their shares has increased by over 30%."
Verb (infinitive)
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Reducing balance depreciation
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a method which imposes a set rate of depreciation on the remaining balance of the asset
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"The new premises cost $100,000 but as we will be using reducing balance depreciation over 5 years, the first year will cost us the most."
Noun (thing)
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Revenue
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the amount of money a company receives over a given time frame
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"Due to the Christmas season, revenues in shops are usually higher in the last quarter of the year than in the first."
Adjective
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Significant
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having, or expressing, meaning or importance
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"As a potential investor the most significant figures for me are the total profit and the liabilities."
Noun (thing)
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Tax accounting
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methods of accounting which focus on tax instead of the appearance of public financial statements
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"Tax accounting provides a simpler method of calculating your tax liability."
Noun (thing)
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Taxable income
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the amount of money on which tax is paid
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"Tax revenues fall when workers lose their jobs, and the taxable income that goes with them."
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