Understanding Financial Statements Bizzer Professional Training


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Financial Accounting vs. Tax Accounting
The manner in which the income statement on the previous page is put together is an example of financial accounting. Accounting for tax purposes is quite another matter. To the casual observer, it might be confusing that companies may have different reporting methods for tax and financial purposes. In fact, some observers might think that there is something inherently wrong with such a proposition. However, having different results for financial and tax purposes is not only permissible, it is a normal business procedure.

For a better understanding of how financial accounting and tax accounting differ, the Schedule M-1 Book/Tax Differences lesson should be completed.

 


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