Who is the consignor in a consignment relationship?
The consignor is a person who sends goods to an agent (consignee) to be sold on their behalf. The consignor retains ownership of the inventory even though it is physically located at the consignees warehouse. Additionally, the consignor cannot recognize revenue until the consignee sells the item to a 3rd party customer.
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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 […]