What is a Tax Deductible? A tax deductible expense is any expense that is considered “ordinary, necessary, and reasonable” and that helps a business to generate income. It is usually deducted from the company’s income before taxation. According to the U.S. Internal Revenue Service (IRS), in Publication 535, Business Expenses, “An ordinary expense is one…
What is a Bank Account Overdraft? A bank account overdraft happens when an individual’s bank account balance goes down to below zero, resulting in a negative balance. It usually happens when there are no more funds in the account in question, but an outstanding transaction is processed through the account, leading to the account holder…
What is Income Tax Payable? Income tax payable is a term given to a business organization’s tax liability to the government where it operates. The amount of liability will be based on its profitability during a given period and the applicable tax rates. Tax payable is not considered a long-term liability, but rather a current…
What is Forecasting? Forecasting refers to the practice of predicting what will happen in the future by taking into consideration events in the past and present. Basically, it is a decision-making tool that helps businesses cope with the impact of the future’s uncertainty by examining historical data and trends. It is a planning tool that…
What is Taxable Income? Taxable income refers to any individual’s or business’ compensation that is used to determine tax liability. The total income amount or gross income is used as the basis to calculate how much the individual or organization owes the government for the specific tax period. One important thing to remember about taxable…
What is Internal vs External Financial Reporting? Internal vs external financial reporting have several key differences that you should be aware of. Internal financial reporting is a business practice that involves compiling financial information on a frequent basis for use within the organization. The documents may contain confidential information, such as business indicators, financial performance,…
What is a Credit Analyst Role? A credit analyst role involves assessing the creditworthiness of an individual or company to determine the likelihood that they will honor their financial obligations. Credit analysts evaluate a borrower’s past financial and credit history to determine their financial health and their ability to repay credit advanced to them by…
What are the Uniform Rules for Collections (URC)? The Uniform Rules for Collections is a set of rules that help assist in the process of collecting debts or owed money or assets. The URCs were established – or proposed – by the International Chamber of Commerce (ICC), a worldwide organization that serves to promote and…
What is Infinite Banking? Infinite banking refers to a process by which an individual becomes his or her own banker. The infinite banking concept was created by Nelson Nash. In his book, “Becoming Your Own Banker,” Nash talks about the use of whole life insurance policies that distribute dividends and how owning such policies allows…
