Audit risk is the risk that auditors issue an incorrect audit opinion to the audited financial statements. For example, auditors issued an unqualified opinion to the audited financial statements even though the financial statements are materially misstated. If a company hires an auditing company, the auditor from the external audit risk model company will use the facts and figures provided…
As an asset loses value due to wear and tear, obsolescence, or other factors, businesses recognize this reduction in value as an expense on their income statements. While depreciation has several financial implications, one of the most significant benefits is the tax shield effect. Remember that the choice of depreciation method impacts financial statements, taxes, and cash flows. Businesses must…
After-tax income is the amount you’re left with when you take your gross income and subtract the taxes you pay. A lot of people use their income minus their federal taxes to calculate this figure, though others will get more specific and subtract their state taxes if they have any. Federal income tax and FICA tax withholding are mandatory, so…
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