deduct

Examples of deduct in the following topics:

• Operating Expenses, Non-Operating Expenses, and Net Income

  • Operating expenses and non operating expenses are deducted from revenue to yield net income.
  • The income statement is used to assess profitability by deducting expenses from revenue.

• Terminology of Accounting

  • In contrast, the accrual method records income items when they are earned and records deductions when expenses are incurred, regardless of the flow of cash.
  • Accrued revenue (or accrued assets) is an asset, such as unpaid proceeds from a delivery of goods or services, when such income is earned and a related revenue item is recognized, while cash is to be received in a later period, when the amount is deducted from accrued revenues.
  • An example of an accrued expense is a pending obligation to pay for goods or services received from a counterpart, while cash is to be paid out in a latter accounting period when the amount is deducted from accrued expenses.

• Overview of Income Tax Accounting

  • Federal income tax law, a net operating loss (NOL) occurs when certain tax-deductible expenses exceed taxable revenues for a taxable year.
  • This allows the company to deduct the loss against future taxable income.

• Cost of Goods Sold and Gross Profit

  • In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service before deducting overhead, payroll, taxation, and interest payments.
  • The various deductions leading from net sales to net income are as follows:

• Importance of Recognition and Measurement

  • One example would be an obligation to pay for goods or services received from a counterpart, while the cash is paid out in a later accounting period—when its amount is deducted from accrued expenses.
  • One difference is that cash received from a counterpart is a liability to be covered later; goods or services are to be delivered later—when such income item is earned, the related revenue item is recognized, and the same amount is deducted from deferred revenues.
  • These expenses include cash paid out to a counterpart for goods or services to be received in a later accounting period—when fulfilling the promise to pay is actually acknowledged, the related expense item is recognized, and the same amount is deducted from prepayments.
  • One difference is that proceeds from a delivery of goods or services are an asset to be covered later, when the income item is earned and the related revenue item is recognized; cash for the items is received in a later period—when its amount is deducted from accrued revenues.

• Relationships Between Statements

  • These changes usually consist of the addition of net income (or deduction of net loss) and the deduction of dividends.

• Introduction to the Income Statement

  • It then calculates operating expenses and, when deducted from the gross profit, yields income from operations.
  • The final step is to deduct taxes, which finally produces the net income for the period measured.

• Average Cost Method

  • The Current Goods Available for Sale is deducted by the amount of goods sold (COGS), and the Cost of Current Inventory is deducted by the amount of goods sold times the latest (before this sale) Current Cost per Unit on Goods.
  • This deducted amount is added to Cost of Goods Sold.

• Income Statement Formats

  • The income statement is used to assess profitability, as the expenses for the period are deducted from the revenues.

• Analyzing Intangible Assets

  • Some costs with respect to intangible assets must be capitalized rather than treated as deductible expenses.