Accounting basic questions

label Business
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

. Questions about the income statement:

a)      What is the difference between gross revenues and net revenues? (Hint: Think about discounts and charity care.)

b)      What is the difference between charity care and bad debt losses? How is each handled on the income statement?

c)      What is depreciation expense, and what is its purpose?

Oct 29th, 2015

Thank you for the opportunity to help you with your question!

a.gross revenue does includes the bad debts and the charity care while the net revenue does gives the deductions of the bad debs and the charity care.

b.charity care is given to those who are unable to pay. while bad  debt losses due occur due to failure to pay for certain reasons and the payment is not meant for profit making . in the income statement an increase in bad debts is an expense while a decrease in bad debts is added to the gross profit.

c .depreciation expense refers to the cost of fixed asset matched with the duration of the life time of the fixed asset . the depreciation is caused by corrosion  and usage .

Please let me know if you need any clarification. I'm always happy to answer your questions.
Oct 29th, 2015

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