BU397 Chapter Notes - Chapter 18: Income Statement, Debits And Credits, Current Asset
Document Summary
Adjustments usually need to be made to the income reported on the fs when determining the income that is taxable under tax legislatiion. Accounting income per gaap taxable income per income tax act. Accounting income: known as income before taxes or accounting profit, creates income tax expense (current and deferred) Taxable income: is a tax accounting term that indicates the amount on which income tax payable is calculated, creates income tax payable and current income tax expense. Companies usually prepare a schedule that begins with accounting income and adjust this amount for each area of difference between gaap income and taxable income: accounting income +/- differences = taxable income x current tax rate = Major differences between accounting and taxable income: revenues or gains are taxable after they are recognized in accounting income. Revenue isn"t recognized on taxable income until cash is received.
