Bill (accounting)

“ Under § 41 of the Internal Revenue Code of 1939, [4] the income of the taxpayer is to be determined 'in accordance with the method of accounting regularly employed in keeping the (taxpayer's) books,' unless 'the method employed does not clearly reflect' the taxpayer's income. Under § 42, [5] items of gross income need not be reported in the taxable year in which received by the taxpayer if, 'under methods of accounting permitted under section 41, any such amounts are to be properly accounted for as of a different period.' And it is clear that accrual methods of accounting may be employed. ”

“ The revenue acts since the Sixteenth Amendment have consistently assessed income taxes on the basis of annual accounting periods, either the calendar year or the different fiscal year which the taxpayer may adopt. ”

“ For purposes of management, which must control all the phases of business activity, a balance sheet is insufficient. A review of the factors producing results up to a given time must be had. Accordingly, the accounting department must supply not only information as to the present state of the assets and liabilities, but also information which indicates how the changes in assets and liabilities since the last fiscal period were brought about—what volume of transactions occurred, what expenditures of assets and energy were necessary to accomplish the results attained. ”

“ The Budget and Accounting Act set up the General Accounting Office under the direction of the Comptroller General of the United States. Section 301, 31 USCA § 44, transferred to it the powers and duties of the Comptroller of the Treasury and of the six Auditors of the Treasury Department, and authorized the heads and disbursing officers of executive departments to apply for the decision of the General Accounting Office upon any question involving a payment to be made by them, which decision, it is declared, shall govern such office in passing upon the account. ”

“ In determining the amount of earnings or profits (whether of the taxable year, or accumulated prior to March 1, 1913) due consideration must be given to the facts, and, while mere bookkeeping entries increasing or decreasing surplus will not be conclusive, the amount of the earnings or profits in any case will be dependent upon the method of accounting properly employed in computing net income. ”

“ The Code exacts its revenue from the individual member's dues which, no one disputes, constitute income. When their receipt as earned income is recognized ratably over two calendar years, without regard to correspondingly fixed individual expense or performance justification, but consistently with overall experience, their accounting doubtless presents a rather accurate image of the total financial structure, but fails to respect the criteria of annual tax accounting and may be rejected by the Commissioner. ”

“ Whatever a government agrees to receive in payment of the public dues is a medium of circulation; is money, current money, no matter what its form may be—treasury notes, drafts drawn at Washington, by the treasurer, on the receiver-general at New York, or, to use the language employed in various parts of this bill, ‘such notes, bills, or paper, issued under the authority of the United States.’ These various provisions were probably inserted not only to cover the case of treasury notes, but that of these drafts in due season. ”

“ During January, bills due in March are [154] filed in the upper pigeon holes; in February, bills due in April are filed in the lower case. Each day the bills due are removed from the file for attention, leaving the pigeon hole empty for filing bills due sixty days ahead. On March 10th, for instance, bills are removed from the No. 10 pigeon hole of the upper case; the current day's bills, due May 10th, are then filed in the same pigeon hole.
Fig. 15. Card Tickler for Collections
When bills come out for attention, they are referred to the accounting department to find if they have been paid. ”

“ And on account of this power the Financier should have no accounts with the public himself, but wherever expenditures are necessary in his department, he should employ proper persons therein, subject to the same powers and modes of accounting with every other person employed in expending public property; or if of necessity he shall at any time have accounts with the public, Congress can appoint a committee, or special board, to examine and settle his accounts. ”

“ Will a proposition be made to authorize the government to issue exchequer bills to the amount of the annual revenue, redeemable at pleasure, to constitute a circulating medium equivalent to the notes issued by the United States Bank? ”

“ Provided, further, That nothing in this section contained shall extend to balances arising solely from the depreciation of treasury notes, received by such person, to be expended in the public service; but in all cases where the pay or salary of any person is withheld, in pursuance of this act, it shall be the duty of the accounting officer, if demanded by the party, his agent, or attorney, to report forthwith to the agent of the Treasury Department the balance due ”

“ The extent of a man's actual sales forms some limit to the amount of his real notes; and as it is highly desirable in commerce that credit should be dealt out to all persons in some sort of regular and due proportion, the measure of a man's actual sales, certified by the appearance of his bills drawn in virtue of those sales, is some rule in the case, though a very imperfect one in many respects.
"A fictitious bill, or bill of accommodation, is evidently in substance the same as any common promissory note ”

“ The revenue system of the country is a subject of vital interest to its honor and prosperity, and should command the earnest consideration of Congress. The Secretary of the Treasury will lay before you a full and detailed report of the receipts and disbursements of the last fiscal year, of the first quarter of the present fiscal year, of the probable receipts and expenditures for the other three quarters, and the estimates for the year following the 30th of June, 1866. ”

“ Income taxes must be paid on income received (or accrued) during an annual accounting period. Cf. I.R.C. §§ 41, 42, 26 U.S.C.A. §§ 41, 42; and see Burnet v. Sanford & Brooks Co., 282 U.S. 359, 363, 51 S.Ct. ”

“ A corporation, joint-stock company or association, or insurance company, keeping accounts upon any basis other than that of actual receipts and disbursements, unless such other basis does not clearly reflect its income, may, subject to regulations made by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, make its return upon the basis upon which its accounts are kept, in which case the tax shall be computed upon its income as so returned. ”

“ Nearly every business with a well-developed accounting system can, at any time, without the formal periodic inventory or closing of its books usual at the end of a fiscal year, determine approximately the amount of its current earnings, the amount accrued since the beginning of its fiscal year, and the part thereof undistributed. ”

“ Excepting in the case of corporations, there are few, if any, compulsory regulations governing the frequency of balance sheets. Some of our tax laws have brought about an increasing regularity with regard to the issuance of formal statements, both balance sheet and profit and loss. England, France, and Germany require a formal statement from corporations once a year. In this country, most states require some form of statement but oftentimes the requirement is so indefinite or so inadequately or half-heartedly enforced that the statement submitted is of little value. ”

“ But the very purpose of the annual accounting concept is to preclude adjustments in the amount of the deduction to reflect the tax consequences of the item's inclusion in the prior year.
'Congress has enacted an annual accounting system under which income is counted up at the end of each year. It would be disruptive of an orderly collection of the revenue to rule that the accounting must be done over again to reflect events occurring after the year for which the accounting is made, and would violate the spirit of the annual accounting system. ”

“ The fair interpretation of the law is that the taxes are upon the property of the banks. In the valuation for taxation the assessor is required to 'take into account the capital, surplus, and undivided earnings,' must be furnished with 'a verified statement of all matters provided by the preceding section,' which, by reference, is seen to be a detailed statement showing the assets of the bank (§ 1321) . ”

“ Now try the committee's bill by the test of these qualities. It will be found that the notes which it authorizes belong to the first-named class; that they are to bear an interest, which may be six per cent.; that they are transferable only by indorsement; that they are not re-issuable; that they are to be paid at a day certain—to wit, within one year; that they are not to be issued of less denomination than one hundred dollars; are to be cancelled when taken up; and that the Secretary of the Treasury is expressly authorized to raise money upon them by loaning them. ”

“ No such power exists; neither the man who holds the real bill, nor the man who discounts it, has any property in the specific goods for which it was given: he as much trusts to the general ability to pay of the giver of the bill, as the holder of any fictitious bill does. The fictitious bill may, in many cases, be a bill given by a person having a large and known capital, a part of which the fictitious bill may be said in that case to represent. ”

“ If they buy even a small bill of goods, paying for it at the time of delivery, they take a receipted bill for it. If they pay a small balance of a book account, or any other small debt previously contracted, they take a written receipt for it. ”

“ A trial balance of the ledger cannot be taken. A schedule or list of account balances may be prepared and debit and credit totals of the list made. This compared with a similar list prepared at the close of the last period will show the changes that have taken place during the current period. A list of the debits and credits to personal accounts in books of original entry for this period must check against the net change shown by the above comparison. Virtually this amounts to a second posting of the items, and if the two postings agree, the presumption is that the ledger is correct. ”

“ The bill is made up of averments which are intended to show that the valuation of the property of other persons in the same town, made by the same assessor, is less in proportion to its actual cash value than that of the complainant's shares; that the same is true in other parts of the State; that some corporations are favored in this valuation, and that certain classes of property are favored in a general way. ”

“ Columnar Analysis of Cash Receipts and Disbursements.—As illustrated in the chapters on purchase and sales journals, additional money columns are often used for the purpose of analyzing the purchases and sales by departments or classes of commodities. A similar analysis of both the cash receipts and cash disbursements may aid in segregating certain classes of cash items and thus save labor in posting. Of cash receipts, two classes are usually more active than all others combined. More cash is received from cash sales and from customers on account than from any other source. ”

“ The Sales account is debited with the balances of the Returned, Sales and Sales Rebates and Allowances, thus showing a balance of net income from sales which is transferred to the credit of Profit and Loss. The Profit and Loss account then shows net income from sales on the credit side, and cost of goods sold on the debit side. ”

“ In 1862, the Legislature placed an item in the appropriation bill which still remains law. It provides that the Comptroller shall not draw his warrant, except for salaries and regular expenses, until the person entitled to the money shall present a detailed account, verified by affidavit as to services; and if for traveling expenses, a detailed account specifying the distance and places from and to which, and receipted vouchers for all disbursements. ”

“ In all problems calling for financial statements, the trial balance should first be tested as to the equality of debits and credits. As stated above, the method of the work sheet is usually the best method for summarizing results, although sometimes skeleton ledger accounts will be found helpful in order to visualize the effect of entries and to trace their course through the accounts. Only painstaking work and the solution of many problems will produce facility and confidence in work of this kind. ”

“ He makes out in his own name, 'for [his] my services as occasional weigher' 'for one month, Sundays excepted,' his bill, with the sum fixed on that basis, and accepts and signs a receipt for it, and this he does every month for 10 years. ”

“ It could not, I think, be seriously contended that a professional man, say a Senator or a Congressman, who attends a convention to read a paper or conduct a seminar with all expenses paid has received 'income' within the meaning of the Internal Revenue Code. Nor would it matter, I assume, that he took his wife and that her expenses were also paid. Income has the connotation of something other than the mere payment of expenses. ”

“ Confusion between Profit and Loss and Balance Sheet Items.—The beginner frequently has trouble in making a proper classification of [Pg 59] income items and sometimes of expense items. Take Interest Income as an example. The asset Cash Received is confused with the title Interest Income, which denotes the source of the cash received. The accounting department maintains both types of records. The receipt of cash arising out of interest income would be classified and recorded under two heads: (1) the asset Cash, to indicate the increase in that asset ”