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

all types of assets

Enumerate the characteristics of accounting information Qualities, or characteristics, which have just been depicted would help us to decide whether accounting information is p

McM Cog is a supplier of industrial parts.  Most orders are received at a call center. The call center currently has 10 phone lines total, i.e., a maximum of 10 callers may be in t

Q. What is fair value in stock market? Fair value - Amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between

DUTIES OF TRUSTEES 1) Not to profit from the trust : A trustee may not receive remuneration except: By order of the court, if the trust is very onerous or the services of the

objective of working capital management and profitability

On July 1, 2010, Spear Co. issued 1,000 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2010 and mature on April 1, 2020. Interest is payable sem

Q. Internal Control Over Financial Reporting? Internal Control Over Financial Reporting - A process designed by, or under supervision of company's principal executive and princ

#explain the accounting cyclequestion..