Tax Accounting

外汇网2021-06-19 14:17:59 155

Accounting methods that focus on taxes rather than the appearance of public financial statements. Tax accounting is governed by the Internal Revenue Code which dictates the specific rules that companies and inpiduals must follow when pparing their tax returns. Tax principles often differ from Generally Accepted Accounting Principles.

Balance sheet items can be accounted for differently when pparing financial statements and tax payables. For example, companies can ppare their financial statements implementing the first-in-first-out (FIFO) method to record their inventory for financial purposes, yet they can implement the last-in-first-out (LIFO) approach for tax purposes. The latter procedure reduces the current year's taxes payable.

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