Amarillo daily news. [volume] (Amarillo, Tex.) 19??-current, 1920-01-14
I\tuuE TlN FACTS NOt
>IiD KNOW

To the person whose income IL
irr'Vsd fro business, the problem
u making nRt correct income
az return is greater than that
presented to the salaried man.
business enterprises may b. d.
yidrd lat oihree Glasses those IN.
gagged in prrdncius and those en-
aged in trading To these may he
added ano her clas. those which
90 no. produce make. or trade.
and which may h. designated a.
iu .,ne-s services. such as transpor.
alton. storage. laundry. livery. and
.arage service In such eases the
cross income would b. the total
u.OIui earned and rer'ivsd.
10 reflect net income correctly
nj io ascertain gross income. In
DriorWs are necessary NJ thu BE-
shining and end of each fiscal or
plonfar year according 10 the
Method 20 accounting In every
u.inrs IN which production. pur-
hleo. ar salr Of merchandise Is an
ncnuo producing factor.
innual Inventories Nrcc>Sar,
The Inventory should include raw
Material and supplies on hand that
ave hran acquired for sale or use
y production. together with all
in.shCd OF partly finished goods
shonid include merchaLdise sold
lut not billed to the customer al
h. date ~ the Inventory. and any
GODS Oui upon consignment. unless
uch goods have been included in
h. ealcs for the taxable year. n
huuid also include merchandise
iurchased although not actually
eeeised. 20 which title has passed
o ne purchaser.
Inventories may be taken either
n the basis Of cost or cost or
gafkct' whichever Is lower
Either mathod once adopted must
. followed each year. unless per
iissior 90 change Is obtained from
h. Commissioner ~ Internal
.e,enue
F,'w 10 omparc Inventories
In computing net income a mer-
hant may find his profits ON the
GLOWING basis:
firs tasceriain the gross sales
rnd the other items oil gross in
i1ms. suth as Interest ON hank de-
losiiS aud miscellaneous items.
hen add together the inventory al
~ beginning Ot the year and the
OF oi GOODS purchased for resale.
ron ih's sum subtract the inven-
Ory 40 Tie cnd al the year. and the
esrli Be- the cost of goods sold.
MS cusi. plus necessary business
Nptnses. Is 10 be- deducted from
ne gross sales and other income
snd ihe result Is the not income OF
he business. Typical deduetible
business expenses are for salaries,
abor. cost % merchandise. raw
materials and supplies. rent. re-
airs. lignt. power. delivery, selling
sost. advertising and insurance.
No special system OF accounts Is
ircs-ribed By the Bureau OF Inter-
al Revenue. but the BOOKS should
how IN detail inventories. purchase.
ales. capital investments. depre-
ia,ion and similar items required
making NJ the iBeome tax re-
urn.
Accounting system Urged
Aside from the necessity OF
secpins systematic accounts In
rider 10 comply vii hthe Govern
nent's requirements. every pro-
:resslvc merchant should adopt an
pDroyed accounting system for the
'ood % his own business SAYS
Commissioner OF Internal Revenue
hniel {. Roper. In no other way
an he further his financial inter
SIS more effectively. Il has been
proven time and time again that
ecurate accounts are absolutely es-
entail 10 success IN business. The
merchant VIII ohas a good account.
ng system l. able 80 eliminate waste
md unnecessary expense. and can
o control his credits as Ia greatly
essen hts chances OF failure. The
INVENTORY. which can not b. taken
Without some form Of accounts. Is
be- compass Of a business. with.
lut u the direction IN which the