Accountant's Equation
Description and Definition of Accountant's Equation
Accountant's Equation is the equation which is the basis of a balance sheet. It is as follows: Assets = Liabilities + Owners' Equity.
Accountant's Equation is the equation which is the basis of a balance sheet. It is as follows: Assets = Liabilities + Owners' Equity.
Acquisition Debt is debt used to buy, build, or substantially improve a principal residence or second home and which generally qualifies for a full interest expense deduction. This is the technical term that Congress uses for what most of us call home mortgage debt on which the interest is deductible. The interest on up to $1 million of acquisition indebtedness is deductible.
The Accrual Method is a business method of accounting requiring income to be reported when earned and expenses to be deducted when incurred – rather than reporting income when you receive payment and expenses when you pay them. However, deductions generally may not be claimed until economic performance has occurred. The Accrual Method is usually used by most large corporations. If you own a business that maintains an inventory you are required to use the accrual method for purchases and sales.
The Accrued Interest Adjustment is an adjustment that reduces your taxable interest income by any interest that you reported and paid tax on as it was earned.
An Accountable Reimbursement Plan is an employer reimbursement plan or allowance arrangement established so that employees can receive business expense reimbursements tax free. The Accountable Reimbursement Plan must require employees to keep records of their expenses and return any excess reimbursement within a reasonable period of time.
An Accounting Method is a method used by a business or individual to keep its records. Most individuals and small businesses use the cash method, although businesses that maintain inventory are required to use the accrual method.
Accelerated Cost Recovery System (ACRS) was a statutory method of depreciation allowing accelerated rates for most types of property used in business and income-producing activities during the years 1981 through 1986. This method allowed assets to be depreciated at a faster rate than had been allowed previously. It has been superseded by Modified Accelerated Cost Recovery System (MACRS) for assets placed in service after 1986.
Accelerated depreciation is a method of depreciation that produces larger deductions for depreciation in the early years of an asset's life versus spreading the cost evenly over the life of the asset, as with the straight-line depreciation method. For most business property, except real estate, the law allows you to depreciate the cost at a rate faster than would be allowed under straight-line depreciation.
Active Income is income from wages, tips, salaries, commissions, and a trade or business in which you materially participate.
You may find information about Actuarial Valuations in this Tax Platform of the American Encyclopedia of Law.