The Richmond Virginian. (Richmond, Va.) 1910-1920, 1920-01-14
IuC0Nt-TAx FACTS
YOU SHOULD KNOW
No z.

10 Tie pearson whose Income - DE-
lived from business, the problem OF
making out 4 correct 5ncone-lax r.
turn - greater than that presented 70
the salaried man
Business enterprises may Be dtu:ded
into three classes-those engaged -
making. those engaged n proon'n1ss ~
sheeA nav be added another class
.hoeA which do not producA MAKE os
trade. and which may Be deas&oA1so
N hr,ssnAss eervices. such a. trans
poytation, storage. laundry, livery, and
garage service. In such cases the
gross income would be the total
frnount earned and received
70 rsdsct nst t.eefee-e sna
20 ascertain 9ross income. inventories
Sre necesxary at the beginning and
ma OF each dscal or calendar year.
according TO the method OF account
.nx. Ia every business In which pro-
auction, purchase, or sale OF naer-
,tandtss Is an chg FAC
or.
Annual Inventories Necessary.
The inventory should include raw
material and supplies on hand that
lave been acquired tor sale o. use Ia
production. together with all naiahed
Or partly finished goods. It should in
-s-G00 LICK C1a&l4]cC 6OS0 0Gk SoS Q41110
% the customer at the date OF tho IN
ventory. and any goods out upon con-
gig1naaat. unless such goods have been
included IN the sales for the taxable
Yaa-. It should also include cer-
.h4ndtse purchased. although not &C.
-uaily received. 70 which title has
passed to the purchaser.
Inventories may be taken either OF
the basis OF cost or. cost or mar
u Ht yf,s4 De f-~ry
rotaoc once adopted must be FOL
lowed each year. unless permission 70
gfaIga Is Obtained from the Conn 1s.
MnZ or OF Internal Revenue.
How to Compute Inventories
T. computing net income 3 rar-
liant may fnd his pro5Es or tie fol-
owing basis:
First ascertain the gross sales and
.he other Items OF gross income, such
Il interest on baak deposits and rn3s-
,al.aneous irarsa Then add together
1e inventory at the beginning OF the
2e-ar and the cost Of goods purchased
sar resale. From this sum subtract
he, inventory q, the a1d OF the year.
Ind the result u the cost OF goods
sold This cost, plus necessary bust
aass Expenses, Is to be deducted from
The gross sales and other income and
he reegl. Is the let income Ct the
cuisines. TYPICAL deductibls business
sxpenEes are for salaries, labor, cost
~ merchandise. raw materials and
Eupplss. rent. repairs. light power,
3elsvAry. selling cost advertising ard
assurance.
No special system az accounts is
prescribed by the bureau os informal
revenue, bnt the books should show
n desaI inventories. purchase, sales.
-ap!ta3 investments. depreciation aaG
similar items required .r making Up
G-s income tax return.
ACCOUNTING SYSTEM URGED.
Aside from the necessity ot keep
!-.g systematic accounts n order TO
-ozrpiy with the governments re-
suirererts. every progressive ner-
,hant should adopt az approved ac-
-aurting system for the good OF his
-wn business" SAYS Commissioner OF
Internal Revenue Daniel c. Roper
IN no. other way can he further his
financial interests more effectively II
las been proven time and time again
that accurate accounts are absolutely
essential to success .r business The
merchant who has good accounting
systern IS able to eliminate waste an6
Unnecessary expease, and car so cor
c-ol his credits as 20 greatly Lessen his
chances OF failure The inventory.
which can not be taken without some
'orrn OF accounts. is the compass Of 4
business. without It the direction in
which the business is heading either
FOR success or failure cannot be 6e1A-~
>.5 IL