To Use an ESOP Successfully, a Company Should Have Pre-Tax

question 2

True/False

To use an ESOP successfully, a company should have pre-tax profits of at least $100,000 and a payroll exceeding $500,000 a year.

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Definitions:

Generally Accepted Accounting Principles

A set of rules, standards, and practices used by accountants in the U.S. to prepare, present, and report financial statements.

Bad Debt Losses

Financial losses resulting from customers' inability to pay back money owed.

Doubtful Accounts

Accounts receivable that a company considers unlikely to be collected and therefore may be written off as a bad debt expense.

Adjusting Entry

Journal entries made at the end of an accounting period to update the accounts for accruals and deferrals not recorded during the period.