What is Bad Debt?

Accounts receivable that will likely remain uncollectable and will be written off.

Bad debts appear as an expense on the company's income statement, thus reducing net income.

In general, companies make an estimate of bad debt expenses that might be incurred in the current time period based on past records as part of the process of estimating earnings.

Most companies make a bad debt allowance since it is unlikely that all of their debtors will pay them in full.

http://www.investopedia.com/terms/b/baddebt.asp

http://moneyterms.co.uk/bad-debt/

What is Gross Salary?

This is the gross salary you receive for the financial year (1st April - 31st March) before any tax is deducted. It also excludes any extra payments you may receive including:

• Expense reimbursements
• Bonus payments
• Payment of working over normal hours

More:

http://en.wikipedia.org/wiki/Gross_income

Understanding How Your Net Salary is Calculated

How your Net Salary is calculated?

Net Pay = Gross Pay - NIC - Income Tax

Out of your gross salary, 2 payments will be deducted:

• Income Tax
• NIC (National Insurance Contribution): contributed by employee and employer

How Income Tax is calculated?

Based on the rates of 2009-2010:

• Earning up to £6,475: No tax! (Personal Allowance)
• Earning between £6,475 and £43,875: 20% tax
• Earning £43, 875 and above: 40% tax

How NIC is calculated?

Based on the rates of 2009-2010:

• Earning between £5,720 and £43,888: 11% (Employee Rate)
• Earning above £43,888: 1% (Employee Rate)
• Earning above £5,720): 12.8% (Employer Rate)

Example1:

So imagine your gross salary is £10,000, so your NIC would be:

Employee NIC: 11% * (£10,000 - £5,720) = £471

Employer NIC: 12.8% * (£10,000 - £5,720) = £548

Income Tax: 0 + 20% * (£43,875 - £6,475) + 40% * (£50,000 - £43,875) = £9,930

Net = £10,000 - NIC - Income Tax = £8,824

Example2:

So imagine your gross salary is £50,000, so your NIC would be:

Employee NIC: 11% * (£43,888 - £5,720) + 1% * ( £50,000 - £43,888) = £4,260

Employer NIC: 12.8% * (£50,000 - £5,720) = £5,668

Income Tax: 0 + 20% * (£43,875 - £6,475) + 40% * (£50,000 - £43,875) = £9,930

Net = £50,000 - NIC - Income Tax = £35, 810

More:

http://www.i-resign.com/uk/financialcentre/tax_calculator.asp

http://www.worksmart.org.uk/tools/tax_calc.php