Accrual basis is an accounting method in which you factor in profits and expenses as they are incurred, rather than after the money has actually changed hands. For example, say you sell your friend a laptop, and he agrees to pay you $1,000 next week. If you’re keeping your accounts on an accrual basis, you write down the $1,000 as income now, even though you won’t actually get the money until next week.
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Accrual Basis is…
Wednesday, August 5th, 2009A Tax Refund is…
Wednesday, August 5th, 2009A tax refund is money you get back from the government if you’ve paid more in taxes than you actually owed.
Value Added Tax is…
Wednesday, August 5th, 2009Value added tax is a tax levied on commodities after they go through production to reflect the increase in value. For example, a cake is made out of many ingredients, but the finished product sells for more than the sum of its parts, so the company selling the cake pays value added tax on this price increase. However, since sellers usually just hike up their prices to compensate for value added tax, it’s the consumers who really pay it in the end.
An Excise Tax is…
Wednesday, August 5th, 2009An excise tax is a tax on commodities made and sold within the same country (as opposed to the import tax on goods from other countries). For example: environmental taxes, and fuel taxes
Filing Status is…
Wednesday, August 5th, 2009Filing status is the category you fill out on your income tax return that determines the rate of your income tax (for example, a filing status of “single” will result in your paying more taxes than someone who has approximately the same income but files as “head of household”). There are five filing statuses: single, married filing separately, married filing jointly, head of household, and qualifying widow(er) with dependent child.
A Pay-Down is…
Wednesday, August 5th, 2009A pay-down is a partial payment of a debt. For example, if you make monthly payments on a new car, each one of those payments is a pay-down.
An Import Tax is…
Monday, August 3rd, 2009An import tax is a charge added to the price of a good when it’s brought from one country into another. Reasons for the tax include: profit for the importing government and protection of its own home companies that produce that same good. For example, the U.S. has a high import tax on sugar in order to protect the U.S. sugar industry from cheaper foreign imports.
A Joint Tax Return is…
Monday, August 3rd, 2009A joint tax return is a tax return that both members of a married couple file together (or jointly). It combines the incomes and tax deductions of the two spouses.
A Personal Exemption is…
Monday, August 3rd, 2009A personal exemption is a tax deduction that is designed to represent the amount of money you’d need to survive at subsistence level – you subtract this amount from your taxable income. You can claim personal exemptions for yourself, your dependents, and (in certain situations) your spouse.