Since an accountant deals with money, in and out, borrowed, credited, owed, and paid, it doesn’t take long to realize that they also deal with bankruptcy. While we may know people who have filed for bankruptcy or have been in that position, some may not yet know exactly what it is.

Bankruptcy is a legal process governed by federal laws and statutes and deals with the debts of an insolvent business or person that is liquidated after being satisfied with the debtor’s assets, if any were left, of course. once that entity comes out of bankruptcy, they are ready to start over, build their credit again, and basically start over.

The bottom line. This is a saying that we hear a lot, every day. But in accounting terms, the bottom line is actually the bottom line of a financial statement. Shows net income and net loss for any period covered by the statement. Now we know.

Capital gains and expenses are also in the news a lot. What are they exactly? Well, a capital gain is a portion of the total gain that has been recognized on the sale of a non-inventory asset. This part of the total profit is not taxed as regular income, hence its name. So, a capital expense is the payment of money to acquire or improve capital goods. The phrase you need money to make money comes to mind when talking about capital expenditures and earnings.

What is a transfer? A carryforward is a provision of tax law that allows current losses or certain tax credits to be used on future period tax returns. That is, you can carry some of those losses to another tax year instead of putting them all in the year they are earned.

Like the bottom line, a closing entry is just as it suggests: it is the last journal entry at the end of an accounting period. The closing entry is the end and then a new accounting period can begin. The closing entry will clear the temporary account balances and summarize things like expenses and income.

Accountants have to deal with much more than just the money that comes in and out of a business. They are an integral part of any company and people without whom you simply cannot run a business. From accounts to taxes, they do it all.

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