Income account-trusts laws and accounts, Financial Accounting

INCOME ACCOUNT

(a) Classification:

Income will be classified under appropriate headings:

  • Rents;
  • Interest on Government securities;
  • Dividends;
  • Interest on mortgages.

 

(b) Taxation:

Income should be stated gross i.e. before tax has been charged on it. Provision for the total liability to tax should be shown as a charge against total income. When income is received net of withholding tax, for accounting purposes the income is grossed by and tax is shown as a pre-payment.

(c) Accruals:

It is a golden rule that income is NOT provided for until received but expenditure is accrued. In the USA, both income and expenditure are accrued in accordance with Generally Accepted Accounting Principles.  In the UK, expenditure is accrued in accordance with the accruals concept, but income is recorded only when it is received. The Explanatory Forward Accounting Standards states that Kenyan Accounting Standards are intended for application to all financial statements issued by estates and trusts; the accrual assumption is recognised in Kenya Accounting Standard Number 1 as one of the fundamental accounting assumptions; hence, in Kenya, income should be accrued to the Balance Sheet date.

(d) Statutory apportionments:
Investments should be maintained at their probate value and where an apportionment to capital has been made, a transfer should be made to the estate capital account to restore the investment to probate value.

Posted Date: 12/15/2012 12:46:30 AM | Location : United States







Related Discussions:- Income account-trusts laws and accounts, Assignment Help, Ask Question on Income account-trusts laws and accounts, Get Answer, Expert's Help, Income account-trusts laws and accounts Discussions

Write discussion on Income account-trusts laws and accounts
Your posts are moderated
Related Questions
As an investor, you are considering buying stock in a relatively new company. Medical Horizons, Inc., has been in existence for 10 years and is now about to go public. The first st

Develop a paper that explains the emerging role of international financial reporting standards and how it affects your particular organization. Your paper should assess the adequac

The objective of this project is to demonstrate the effect of releasing accounting information concerning profits on the valuation (i.e. share price) of an Australian;listed compan

calculate the ratios of the company called ''Apple''

After discontinuing the ordinary business operations and closing the accounts on May 7, the ledger of the partnership indicate the following: Cash $75,000 Non cash 105,000 Liabilit

Suppose the interest rate for a one-period bond is 4%. (a) What is the price of an asset paying (1,1,1) which means 1 after 1 period, 1 after 2 periods, and 1 after 3 periods.

EVERLIGHT COMPANY LIMITED Comparative Balance Sheet December 31, Year 1 and Year 2     Year 1       Year2

Beginning balance 24,000 cash Sales 250,000 Gross profit 45% of sales Accounts receivable increase by 24,000 Accounts payable increased by 51,000 Inventory increased by 98,000 Sell

How to Determine the financial reports of businesses In response to criticisms that financial reports of some businesses aren't clear enough to users, accounting rule makers ha

Settlement Method - Method of ACCOUNTING for SECURITIES whereby transactions are recorded on the date securities settle by delivery or receipt of securities and receipt or payment