Intermediate Accounting For Dummies

Chapter 17

Accounting for Income Taxes

In This Chapter

Looking at the difference between financial and taxable income

Walking through temporary and permanent differences

Talking about deferrals

Understanding the difference between income tax payable and expense

Considering the net operating loss effect on income taxes

Calculating interperiod and intraperiod tax allocations

Although preparing income tax returns isn’t part of your job description as a financial accountant, knowing how to account for income taxes is. Financial statements prepared according to generally accepted accounting principles (GAAP) differ from financial information you figure for income tax returns, so you may find revenue and expense differences between the two. In this chapter, you read about both types of differences: temporary and permanent.

In addition, you look at how to account for tax deferrals, which ...