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
The discount rate used must normally reflect the weighted average cost of equity and debt taking into account the systematic risk of the investment. A company's weighted average co

Q. What is Balance Sheet? Balance Sheet - Basic FINANCIAL STATEMENT, generally accompanied by appropriate DISCLOSURES which describe the basis of ACCOUNTING used in its prepara

We consider N identical firms that compete à la Cournot. Each firm incurs a constant marginal cost c. The demand for the homogenous good is given by the following function: Q = 1 -

Heathrow issues $2,000,000 of 6%, 15-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,728,224.

You have observed the following returns over time: Year Stock X Stock Y Market 2006 13% 13%


On May 19, 2010, Kim placed in service a LIGHT VAN that cost $54,850. It is used 80% for business each year. What is the maximum cost recovery deduction available for the van in 20

Q. Determine expected future cash flows? A rights issue will be a smart source of finance to Tirwen plc as it will reduce the gearing of the company. The current debt/equity ra

Illustration of change in profit sharing ratio A, B and C have been trading as equal partners having capital contributions of £400,000, £300,000 and £200,000 respectively. They

Real Estate Investment Trust (REIT) - Investor-owned TRUST that invests in real estate and, in place of paying income tax on its income, reports to each of its owners her or his pr