StudentShare solutions
Triangle menu

Finance and Accounting Problem - Essay Example

Nobody downloaded yet

Extract of sample
Finance and Accounting Problem

Bank interest is deducted at source at the rate of 20%. Therefore, they cannot be included as taxable income. Depreciation reflects how fixed assets of business reduce in value through wear and tear. However, depreciation is just an accounting concept with nothing to do with taxation. Depreciation can be manipulated and taxmen do not recognize it as an allowable tax. Instead, annual capital allowance is computed. Vehicle of businesses have a standard rate of 25% on a reducing balance. In April 2008, Annual Investment Allowance (AIA) of ?50,000 per annum was introduced. This allowed business entities to spend ?50,000 annually and claim the full cost against tax. For Sam’s case, the tax written down value for the car in 2012 is ?6,750. According to the tax law in the UK the capital allowance on the car is the lower of 25% of the written down value of the car or ?3000 each year. ...
234.00 Add Car Tax (178 g/km) ? 210.00 Less those form charity ? 100.00   ? 31,542.08 Notes PAYE tax and NIC thresholds are ?7,475 and ?7,225 per year respectively. Table 3- Computation of PAYE Income  Rate  Amount Amount ?7,475.00 ?35,000.00 20% ?27,525.00 ? 5,505.00 ?35,001.00 ?80,771.25 40% ?45,770.25 ? 18,308.10  Total ?23,813.10 Table 4- Computation National Insurance Contribution (Sam is categorized as in class 4) Income  Rate  Amount Amount ?7,225.00 ?42,475.00 9% ?35,250.00 ? 3,172.50 ?42,476.00 ?80,771.25 11% ?38,295.25 ?4,212.48 Total ?7,384.98 The dividends paid as tax was 32.5% of ?720=?234 Car tax for a car producing 178 g/km CO2 is ? 210.00. Contribution to charity is computed taking into consideration that Sam declared that he is UK’s tax payer. Therefore, Sam has to be refunded some money, which is computed as follows. The amount to be refunded = ?400? ((40-20) ?80) = ?100 Question 3 Table 5- Sam’s Income Tax and National Insurance Computation for 2011/12 if he is classified as an employee of West London Ltd. Add PAYE ?22,303.12 Add NIC class 1D ? 11174.06 Add taxable dividends ?234.00 Add Car Tax (178 g/km) ?210.00 Income tax ? 3,477.18 Notes Table 6- Taxable income Item Amount Basic Salary ? 76,996.31 Benefits 0  Taxable income ? 76,996.31 Table 7- PAYE computation Income Amount Used Rate Amount ?7475.00 ?35000.00 ?27525.00 20% ?5505.00 ?35001.00 ?76996.31 ?41995.31 40% ?16798.12 Total PAYE   ?22303.12 Sam earns higher income and will be paid ?90,000 annually inclusive of National Insurance Contributions. No reimbursement for any travelling or accommodation when away from home on branch visits and no refund for trade subscription and reference materials. Mileage payments for business travel. The mileage expenses are qualifying amounts ...Show more
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Finance and Accounting Problem Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/49219-sam-smith-aged
(Finance and Accounting Problem Essay Example | Topics and Well Written Essays - 1500 Words)
https://studentshare.net/finance-accounting/49219-sam-smith-aged.
“Finance and Accounting Problem Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.net/finance-accounting/49219-sam-smith-aged.
  • Cited: 0 times

Summary

Question 1 Table 1-Taxable Trading Income of Sam Smith for 2011/12 Item Amount in ? Amount in ? Business income (fees)   90000 Expenses     motor vehicle capital allowance (50% of 1687.50) 843.75   Computer capital allowance 0   Motor insurance (50% of 800) 400   Repairs and servicing (50% of 650) 325   Road license (50% of 150) 75   Petrol – home to office 400   branch visits (no refunds) 1,200   Repairs and software for the computer 1,500   Hotel bills regarding branch visits (50% of 2400) 1,200   Stationery (50% of 150) 150   Telephone (50% of 360) 360   Trade subscription (50% of 500) 500   Books and reference materials (50% of 3750) 1,875   charity under the Gift Aid sc…
Finance and Accounting Problem
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Finance and Accounting Problem"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Management accounting & finance
Some costing techniques are of the traditional management accounting systems while others are from the strategic management accounting realm. Traditional management accounting has come under increasing scrutiny and has been criticized on various grounds inclusive of the fact that it fails to provide information for strategic decision making purposes (Johnson & Kaplan, 1987; Bromwich and Bhimani, 1989; and Roslender and Hart, 2003).
11 pages (2750 words) Essay
Accounting and Finance
With a continuous development of the mankind and human civilisation the implication of accounting and its importance also have changed to a considerable amount. As stated by Elliott & Elliott (2007), “Accountants are communicators
8 pages (2000 words) Essay
Accounting & Finance, Information Tools
Accounting & Finance, Information Tools 1. Explaining each ratio trend whether the ratio or trend indicates strength of the company; a likely weakness, threat, or emerging problem; or a satisfactory condition that management should not view as a strength or weakness Company G current ratio declined from 1.86 in 2011 to 1.79 in 2012 indicating company weakness in at fulfilling creditor’s obligation.
3 pages (750 words) Essay
Finance and Accounting Essay
Secondly, the fact that the enhanced disclosure is as well not enough and finally, there is the objective of realizing an improvement in the quality and the comparability of the financial reporting. During the analysis of the lessee’s financial position, it is evident that many users tend to want to capitalize operating leases through adjustments made to the reported financial information.
4 pages (1000 words) Essay
Finance and Management Accounting
The R & D manager has to justify the money spent on research by coming up with new products and processes which would help to reduce costs and increase revenue. If the R & D department is like a bottomless pit only swallowing more and more money but not giving any positive results in return, then the management would have no choice but to close it.
9 pages (2250 words) Essay
Managerial Accounting Problem
The difference between the PV of all net cash flows from investment and required capital expenditures equals to NPV of this project. If it is positive the management should pursue the project. If it is negative the management should decline it. Depreciation is not included in computations because it is not a cash flow.
2 pages (500 words) Essay
Accounting - finance
1). A good budget helps management communicate its goals to its personnel and control the direction of the company’s operations. The budget is also important for the management and the employees because it provides a
6 pages (1500 words) Essay
Accounting and Finance
Accounting deals with “identifying, measuring and communicating economic information to enable informed judgements and decisions by users of the information” (Collier 2003, p. 3, citing a 1966 definition). At the same
6 pages (1500 words) Essay
Finance accounting
existence of accounting records is to minimize or reduce the effect of principal-agent problem; its impact is reduced by measuring and close monitoring of the performance and reporting the results to parties concerned. Financial accounting is a discipline which has evolved over
12 pages (3000 words) Essay
Finance and Accounting
As tyhe report stresses adjusted present value approach is a capital budgeting technique that is used to value a firm that borrows debt. The technique starts with computing the value of the firm without the debt. Secondly, the technique values the firm with debt then considers the effect of the debt value both cost of borrowing and benefits.
2 pages (500 words) Essay
Comments (0)
Click to create a comment
Let us find you another Essay on topic Finance and Accounting Problem for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us