Income accounts are the accounts that a company keeps track of its sources of income. Examples of income accounts are merchandise sales, legal and professional fees, consulting fees, and interest income. Income accounts are credit balance accounts that increase profits.
It is also called a profit and loss statement or P&L. An income statement lists the company's income by revenue sources, cost of sales, expenses by various categories, and net income which is gross profit minus total expenses.
Income Taxes Payable:
The liability account indicating the amount of income taxes due for a "C" corporation for state and federal corporate taxes at a specific date. It can include both a current portion and a deferred portion. A deferred portion would be a timing difference between depreciation expense per books and depreciation for corporate income tax purposes.
An installment sale is selling property and receiving the sales price over a series of payments. A down payment is normally made and the balance of the sale is an installment sale. An example would be fifteen (15) years.
The amount paid to an insurance company for a specific amount and kind of protection.
Items of non-physical nature such as goodwill, patents, and trademarks that are of value to a company as a going concern, the value being dependent upon the rights and earning power that possession confers upon the owner.
Inventory is the cost of goods a company holds for sale to customers. The inventory can be merchandise a company buys for resale, or it can be merchandise that a company manufactures or processes, selling the completed product to the customer. Inventory can be valued using the following methods: Specific Identification, FIFO, or LIFO.
The number of times a business turns its merchandise inventory into sales each year.
Inventory Turnover Ratio:
Inventory turnover ratio measures the average efficiency of the company in managing and selling inventories during the reporting period. The number is calculated by dividing the Cost of Sales annualized by the average inventory value. For instance, if the company's Cost of Goods Sold for the 12 month period is $500,000, and their average inventory balance through the year was 50,000, then they are said to have a turnover rate of ten times. In most cases, a company is seeking a higher turnover rate, indicating a more efficient management of inventory.