About This Chapter
Timing in Taxation - Chapter Summary
If you need to learn timing in taxation concepts, this chapter can help you out. Our expert instructors explain the fundamental principles of accounting and contextualize relevant tax and accounting terms, such as the annual accounting scheme, realization requirements, nonrecognition transactions and installment sales. Be sure to take the accompanying self-assessment quizzes to check your understanding of the material. For you're convenience, we've made the chapter available 24/7 and accessible on any device that has an Internet connection. Upon completion of the chapter, you should be equipped to:
- Explain the fundamental principles of accounting
- Define the annual accounting scheme
- Differentiate between cash-basis and accrual accounting
- Evaluate realization requirements
- Assess nonrecognition transaction in taxation
- Understand the internal revenue code's constructive sale rule
- Explain the concept of original issue discount
- Describe the tax implications of installment sales
- Discuss the transfers of property involved in marriage and divorce
1. The Fundamental Principles of Accounting
Accounting is an art, but just as with any form of art, you need the right tools to make your masterpiece. For accounting, those tools are the seven major accounting principles. In this lesson, you will learn what those principles are and what they are used for.
2. Annual Accounting Scheme: Definition, Exceptions & Taxation
This lesson discusses annual accounting schemes, most notably the VAT tax and how it affects companies and consumers alike. We will explore the pros and cons to this tax, an example, and how it is used.
3. The Differences Between Accrual & Cash-Basis Accounting
There are two accounting methods that companies can choose from when deciding how they want their books done. They are cash basis and accrual basis. In this lesson, you will learn the differences between the two.
4. Realization Requirements: Timing & Tax Implications
This lesson will go over the realization principle of taxation and how it works. We'll go over the definition of realization, how you record these types of payments for taxes, and how you can spread these out over time.
5. Nonrecognition Transaction in Taxation
Sometimes corporate gains or losses are not included in corporate tax filings. This lesson will discuss nonrecognition transactions and treatment of distributions from these transactions.
6. Original Issue Discount: Definition & Taxation
Bonds are often purchased for a price that is not necessarily face value. This lesson will define the original issue discount and tax implications of these bonds.
7. Installment Sales: Definition, Tax Implications & Examples
This lesson will cover what an installment sale is, the tax implications of this type of transaction, and how to record it on taxes. We will also go over some examples of installment sales and why an installment sale can be risky for a business.
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Other chapters within the Accounting 307: Federal Income Taxes course