While some lines of an income statement depend on estimates or forecasts, the interest expense line is a basic equation. When accounting for income tax expense, however, a business can use different accounting methods for some of its expenses than it uses for calculating its taxable income. The hypothetical amount of taxable income, if the accounting methods used were used in the tax return is calculated. Then the income tax based on this hypothetical taxable income is fitured. This is the income tax expense reported in the income statement. This amount is reconciled with the actual amount of income tax owed based on the accounting methods used for income tax purposes. A reconciliation of the two different income tax amounts is then provided in a footnote on the income statement.
Net income is like earnings before interest and tax (EBIT) and can vary considerably depending on which accounting methods are used to report sales revenue and expenses. This is where profit smoothing can come into play to manipulate earnings. Profit smoothing crosses the line from choosing acceptable accounting methods from the list of GAAP and implementing these methods in a reasonable manner, into the gray area of earnings management that involves accounting manipulation.
It's incumbent on managers and business owners to be involved in the decisions about which accounting methods are used to measure profit and how those methods are actually implemented. A manager can be requires to answer questions about the company's financial reports on many occasions. It's therefore critical that any officer or manager in a company be thoroughly familiar with how the company's financial statements are prepared. Accounting methods and how they're implemented vary from business to business. A company's methods can fall anywhere on a continuum that's either left or right of center of GAAP.
Summary:
The San Diego schools is the largest school district in the state. Last year, almost 13 percent of its eighth graders failed two or more core subjects of English, mathematics, history and/or science. This does not include those who received Ds. They were all grades of F.
The San Diego schools is cracking down. Beginning with the current eight grade classes within the San Diego schools, these students will be subject to a new policy recently passed by the San Diego schools ...
Keywords:
San Diego schools, schools, San Diego
Article Body:
The San Diego schools is the largest school district in the state. Last year, almost 13 percent of its eighth graders failed two or more core subjects of English, mathematics, history and/or science. This does not include those who received Ds. They were all grades of F.
The San Diego schools is cracking down. Beginning with the current eight grade classes within the San Diego schools, these students will be subject to a new policy recently passed by the San Diego schools board with a vote of four-to-one. A new retention policy puts forth that any eight grader who fails (grade of F) two or more core subjects will be held back to repeat the eight grade. If the parents of such San Diego schools’ students object, then those children will be passed on to high school but must actively participate in a ninth grade intervention program.
There was much heated discussion about retention versus social promotion (passing San Diego schools’ students on to the next grade, when they are not prepared) before the vote was taken. The one dissenting vote was by San Diego schools’ board trustee Shelia Jackson, who argued that the causes for such failures should be addressed before punishing the students. She noted that the children did not fail on their own — teachers, parents and counselors participated, as well.
Some San Diego schools board trustees felt that the threat of retention would give the failing eighth graders incentive to work harder and get back on track. Jackson felt they were punishing the students for possible ineffective teachers or teaching methods.
All San Diego schools board trustees did agree that intervention programs for failing students should be implemented as early as elementary school to guarantee student success later in school and career.
The San Diego schools’ board trustees did not discuss what specific intervention programs would be provided to eighth graders who are held back or to those passed to the ninth grade at their parents’ request. The design of such programs will be left to each individual middle or high school, giving them the ability to tailor their programs to the needs of the students.
Retention is not a new method to assist failing students. It is widely used across the nation. Even the San Diego schools have used it in the past. Almost five percent of the San Diego schools’ sixth and seventh graders (more than 400 children) were retained in 2001 and almost three percent of first graders (360 children).
Superintendent Carl Cohn sides with Jackson, wondering if the new retention policy will hurt the San Diego schools’ students more than help them. He believes that retention only accelerates the drop out rate, and studies have proven Cohn correct — students held back are more likely to drop out of high school, than those promoted on to the next grade.
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