The employer pays a matching FICA tax, so the adjusting entries total FICA paid on an individual's earnings is 12.4% for Social Security, up to the earnings limit, and 2.9% regardless of the total amount earned. The Federal Insurance Contributions Act tax is imposed on most employees and employers. Contributions made through FICA, and other payroll taxes, fund Social Security, Medicare,...

The historical cost method is used for recording the acquisition of assets in the U.S. under GAAP (Generally Accepted Accounting Principles). Applying the cost principle can present challenges, particularly in industries where asset values fluctuate significantly. For example, companies in the real estate or technology sectors may find that the historical cost of their assets does not ac...

These are called the contribution margin ratio and variable cost ratio, respectively. Contribution margin and regular income statements can be very detailed, requiring an in-depth understanding of the business’s inner workings. You’ll notice that the above statement doesn’t include the contribution margin. That’s because a contribution margin statement is generally done separately from t...