Law 5110 Study Guide - Quiz Guide: International Financial Reporting Standards, Tax Accounting In The United States, Accrual
Document Summary
Methods of profit determination: tax accounting vs. commercial accounting. Important to study the relationship between tax vs. commercial accounting: germany very close relationship, but if commercial accounting allowed elections, these would be limited for tax purposes, united states: independence between tax and commercial accounting. Oversight bodies in accounting: independent professional bodies - fasb (not controlled by the government. : eu and worldwide: convergence by using accounting standards given by the. International financial reporting standards (independent professional body not controlled by the government). Methods of profit determination: civil law v/s common law: to determine the taxable income arising from business, positive difference: taxable business income while a negative difference is a business loss. How does the profit determination take place: receipts and outgoings system, common law, starting point gains and expenses recognized for tax purposes. Timing issues in the recognition of income and deductions: accrual basis taxpayers, items are included when they are earned, and expenses when they are incurred.
