There are permanent and temporary timing differences between the two.ĭoes that help. ![]() Remember, one of the reasons this is so confusing is because the rules for financial reporting are often different than the rules used to determine your taxable income. It is what you are actually calculating when you prepare the return. ![]() The actual amount of taxes you pay when you file your tax return would show on the tax return line called "Taxes Payable". Once you actually pay your corporate taxes, you will adjust your initial estimate to the actual tax liability, which is paid in the current year. The adjusting entry is booked to the prior year, not the current year, so you can match the tax expense with the revenue for that period. If you remember, one of the basic principles in bookkeeping is to match revenues with expenses. You initially book your income tax entry as an adjusting entry when doing year-end. I think what is confusing you is the timing of the transactions. You cannot operate a business in North America without paying income taxes. These expenses are usually deductible if the business is operated to make a profit." ![]() The IRS website under Businesses>Business Expenses explains that "business expenses are the cost of carrying on a trade or business.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |