Because the word profit has more than one meaning,
accountants prefer to use the term net income, which can be defined precisely from an accounting point of view. 2. Business enterprises are engaged at all times in activities aimed at earning income. 3. For example, owners must receive income reports every year, and the government requires the company to pay taxes on annual income. 4. Readers of financial reports who are familiar with these principles can understand how the accountant is defining net income and will be aware of its strengths and weaknesses as a measurement. 5. When a business provides a service or delivers a product to a customer, it usually receives either cash or a promise to pay cash in the near future. 6. The collection of accounts receivable, which increases cash and decreases accounts receivable, does not result in revenue either. 7. Often called the cost of doing business, expenses include the costs of goods sold, the costs of activities necessary to carry on the business, and the costs of attracting and serving customers 8. Withdrawals from the company by the owner decrease owner's equity, but they are not expenses. 9. . How many years the buildings or equipment will be in use must of course be an estimate. 10. This creates another problem for the accountant, who of course does not know how long the business will last. 11. If accountants have evidence that a company will not continue, of course, then their procedures must change. 12. Though direct cause-and-effect relationships can seldom be demonstrated for certain, many costs appear to be related to particular revenue. 13. When there is no direct means of connecting cause and effect, the accountant tries to allocate costs in a systematic and rational way among the accounting periods that benefit from the cost. 14. To do so, the accountant must understand and be able to measure the present value of future cash inflows and outflows. 15. Once the broad area has been determined, the auditor can obtain the information for the entity, as discussed in the last chapter. 16. If the survey is concerned automobiles, should the auditor not consider what is happening to tires, batteries, and repairs, as well as to gasoline? 17. The Administrative Agency might in fact already have a requirement that drivers of state vehicles buy gasoline from government outlets; nevertheless, as auditor, Ms. Price asserts that they should have that requirement. 18. We can easily see now that in further planning for this case, the auditor can determine what types of evidence she would need if she expected to continue the examination. 19. As long as compliance with the law, regulation, or other requirement results in more efficient or economical operations, noncompliance with the requirement would result in a management audit report.
Noun clause conjunctions: WH questions, if/whether, that