Basis Periods (2) – Current Year

Current year The basic rule is that an individual’s taxable profit assessed in each tax year will bebased on the profits for the 12 months accounting period ending in that tax year. Thisis known as the current year basis. This applies to individuals who havebeen in trade for several years past. An individual in business … Read More

Basis Periods (1)

Welcome to first in a series of blog posts about basis periods, found in the AAT Level 4 Business Tax module. 1 – Introduction The basis period is the accounting period within which an individual’s income or profitswill be subjected to tax. Every individual tax payer pays their taxes based on a tax year. The … Read More

The Accounting Equation

Accounting Equation: ASSETS – LIABILITIES = CAPITAL QUESTION: Anushka began a sole trade business on 1 January 20X1. During the first month of trading, the following transactions took place: She started the business with £5,000 of cashShe took out a loan from the bank of £10,000She purchased a van for £12,000 cashShe purchased 100 units … Read More

FRS 18

FRS 18 sets out two main qualitative characteristics (relevance & reliability) and fourenhancing qualitative characteristics that information in the financial statements shouldpossess in order for the content of the financial statements to be useful to its users.When an accounting policy is to be selected, its appropriateness to the businessshould also be considered against these qualities. … Read More

Discharge of Contracts

DISCHARGE OF CONTRACTS Discharge of contracts implies a termination of the contractual agreement and the contract obligations come to an end. Discharge by performance Discharge by breach Discharge by performance is where all parties to a contract have fulfilled their part of the terms to the contract agreement, so all primary obligations will cease. Discharge … Read More