Corporation taxable income vs book income
Not what you're looking for?
Describe the process of computing a corporation's taxable income assuming the corporation must use GAAP to determine its book income.
Purchase this Solution
Solution Summary
The 542 word cited solution presents methods for a small business and a large business. Also listed are examples of differences in GAAP and Tax.
Solution Preview
That is a very thoughtful statement and although the resulting taxable income should be the same in all cases, the size of a business may change the process.
For a small business:
The company may hire an independent accountant who prepares unaudited financial statements for clients together with the federal and state corporate return. The financial statements are generally for the bank and the owners. The use of GAAP may be mandatory (companies with inventory, for example) or may be preferred by the users of the statements.
Whether GAAP is used or not, the corporate tax return has one (huge) set of rules that may not match the financial statements. The accountant hired to prepare the financial statements will change hats to prepare the tax return. We assume competency in tax preparation which means the accountant ...
Purchase this Solution
Free BrainMass Quizzes
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.