COMMERCE 1AA3 Study Guide - Final Guide: Income Tax, Income Statement
12 Dec 2016
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Taxable income: accounting income does not necessarily equal taxable income due to temporary timing differences and permanent differences, temporary differences result because accounting income is prepared under the. Accrual basis, and taxable income is prepared under modified cash basis. Revenues accrued in 2016 but cash collected in 2017. Revenues will be recognized in accounting income in 2016 and in taxable income in 2017: permanent differences result when companies recognize expenses and revenues that the cra does not allow. Fines and penalties are expenses in the accounting income, but are not allowed in the calculation of taxable income. Income tax expenses = accounting income tax rate. Income tax payable = taxable income tax rate. Income tax payable: when they are not equal, balance the journal entry with either deferred income tax. 2016 provided services for ,000: cash and on account. Income tax expense = ,000 0. 40 = . Income tax payable = 0. 40 = .
