RSM324H1 Chapter 5: CHAPTER 5-1
15 Feb 2017
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Capital: of capital gains are taxable and of capital losses are available for deduction (though only against other capital gains) Business: income is fully taxable and losses can be offset against all other sources of income. Generally accepted accounting principles (gaap: revenue recognition. Revenues are recognized at the point in time when the earning process is substantially complete. Recognition of revenue when earned, is not associated with the receipt of cash: concept of accrual. Expenses are recognized and recorded for accounting purposes when they are incurred, rather than when they are paid. The occurrence and recognition of expenses is not associated with the payment of cash: concept of matching. Expenses incurred be deducted in the time period in which they contribute to the earning of revenue. All costs must be accumulated, assigned to a particular product, and then held in abeyance until such time as the finished product is sold.
