What is a partnership?
What is a partnership? The partnership is considered a flow through entity and like S corporations, will report ordinary income items (including gains and losses) from the partnership to the shareholders individual tax return. Partnerships will be required to report each individual partners’ distributive share of their ordinary gains and losses plus specially stated items.
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When can a PSC deduct payments made to owner-employees?
The general rule is that personal service corporations (PSC’s) will be able to deduct owner-employee payments made in the same year that it is includible in their gross income for individual tax purposes.
What do accountants mean when they say revenue can be recognized under the accrual basis of accounting?
Under U.S. GAAP, which requires the use of accrual basis accounting, a company cannot recognize revenue until their performance obligation is satisfied. The visual below illustrates that key steps to revenue recognition:
What is the relationship between volume and variable cost per unit?
If the variable cost per unit remains fixed, then any increase or decrease in unit volume will result in an increase or decrease in total variable costs for a business. For example, if variable cost per unit was steady at $5, then if unit volume were to increase from 100 to 200 units, then total […]