What are the main methods of inventory accounting? What is the difference between them? Which offers a tax advantage? When?

There are also different accounting methods for the inventory; that is, the goods that a business has on hand. They are commonly known by the strange names of Fifo and Lifo. Fifo stands for first-in, first-out, and it assumes that the first goods acquired are the first goods sold. Lifo, on the other hand, stands for last-in, first-out, and it assumes that the costs of the most recently acquired goods are the same as the costs of the goods sold during the accounting period. The second of these, the Lifo method, may be better from a tax standpoint, since this method results in a lower tax liability in a period of rising prices. Under Lifo, the higher-priced goods are depreciated in the current accounting period.

 

What tax advantage is available to businesses that sell merchandise for personal use with payment over a period of time?

A tax advantage also exists for businesses that sell merchandise for personal use. These sales are often made on the installment basis, with payments spread over a period of weeks, months, or perhaps even years. For tax purposes, it is permissible to report the profit from sales during the years in which the actual payments are made rather than during the year of the original sale.

What tax advantage is available to owners of most depletive assets?

A tax advantage is also available to the holders of most depletive assets – those which are used up, or depleted, over a period of time-like oil, natural gas, uranium, or coal. The taxpayer who owns assets of this kind is allowed a deduction on the gross income derived from the asset. The deduction is known as a depletion allowance; because of the economic importance of many of the depletive assets, the percentages allowed to the taxpayers are of great political concern. Some corporations received such a tax advantage that despite substantial earnings, they were paying almost no taxes.

 81. Explain how to distinguish between financial accounting and management accounting. What other types of accounting can you name?

ст 154 учебника ENVIRONMENT

Managerial accounting provides the information for these decisions. In

form, managerial accounting information may be general (for use in longrange planning) or detailed (for use in cost control). The uses of

managerial accounting information are varied, ranging from decision

making by managers charged with successful operations of the specific

division to which the information relates to planning in both the long and

short range.

For internal use by management, managerial accounting information

generally is narrow in focus. It usually relates to a part of the company’s

operation.

Financial accounting information is intended both for managers and

for the use of parties external to the organization, including shareholders

(and trustees in nonprofit organizations), bankers and other creditors,

government agencies, and the general public. Investors in an enterprise

need information about the financial status and future prospects of an

organization. Bankers and suppliers grant loans and extend credit to

organizations based оn their financial soundness.

 

Если вкратце то главное отличие в следующем

 

Financial accounting use of parties external to the organization such as shareholders and bankers as opposed to management accounting which is intended for internal use by management in decision-making

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The different types of accounting

● Financial accounting.

● Governmental accounting.

● Public accounting.

● Cost accounting.

● Management accounting.

● Tax accounting.

● Auditing.