In those cases where the fiscal year of the concern ends December 31, the annual return to be made in connection with the income tax is easily prepared from the balance sheet and its accompanying statements. In many instances the fiscal year does not end on that date, and many concerns have been put to considerable trouble to prepare an accurate statement for the calendar year. If the accounts have been kept as indicated herein, there is little difficulty in compiling figures, especially if monthly statements have been prepared as suggested in Chapter XXVII (The Trial Balance And Monthly Statements. Section 255. The Purpose Of A Monthly Trial Balance). In such cases it is only necessary to add the total expenses for the twelve months; the total profits and the other figures as to indebtedness can be supplied from the current trial balance.
In cases where no monthly statements have been prepared, the earnings can best be ascertained in the manner indicated in Section 259. In this the total profits for the year, such as rent, etc., are taken, and also the total collections from contracts, while the profits thereon are estimated at a percentage ascertained either from the balance sheets of previous years or from an examination of the contracts themselves. Such profits, of course, can always be ascertained if we know the cost of the properties sold and the amount of the selling price.