What are some of the major differences between GAAP and income tax accounting?© BrainMass Inc. brainmass.com June 3, 2020, 11:01 pm ad1c9bdddf
Question: What are some of the major differences between GAAP and income tax accounting?
The overriding, or overall difference between GAAP and Tax accounting is the basis in theory behind each. GAAP accounting follows strict conventions applied consistently over time. The two most important GAAP principals that vary with tax reporting are the matching principle and the revenue recognition principle. The very basis of GAAP requires that revenue be matched to expense, and revenue be recognized when earned.
Tax law, on the other hand, is motivated by the need ...
This response presents the theory of the difference between GAAP and tax together with general examples to explain. Then eight specific examples of common types of differences between book and tax are listed with details. The explanation is given in 352 words.