Even though general accounting and taxes have something in common, you also need to know the differences between these two accounts. In the meantime, you can hire an Online bookkeeper if you need experts in Bookkeeping Services Brisbane to help your company.
Here are the differences between the general and tax accounts that you must know:
1. Users of Financial Statements
Users of financial statements in commercial or general accounting such as shareholders, creditors, employees, management, government, society and so on. While users of financial statements from tax accounting are tax authorities.
2. Compilation Guidelines and Presentations
Guidelines for the preparation and presentation of general accounting, namely PSAK, while for tax accounting is the applicable tax law.
3. Nature of Information
The nature of the information in both accounting is also different. Information on general financial statements is general or can be used by anyone. While in tax accounting, financial statements are confidential. Usually, those who know only management and tax authorities.
4. Basic Recording
Transactions in commercial accounting are accounted for under the substance over form principle, namely recording and reporting carried out by prioritizing economic substance rather than formal and legal nature. In contrast to commercial accounting, transactions in tax accounting are recorded and reported when meeting taxation terms and conditions, namely by prioritizing formal or legal nature rather than economic substance.
Commercial financial statements are allowed to be compiled based on currencies other than the currency of your country, while tax accounting must use the country’s currency or be allowed to use other currencies as permitted by regulations.
From financial accounting, you can get information about the state of an entity for a certain period. The financial information which will later be used as a basis in decision making. While tax accounting is more specific when compared to general accounting. Tax accounting presents financial information related to its compliance with the government. Although financial statements are prepared based on general financial accounting standards, however, in some parts they must be adjusted to the tax provisions. So in tax accounting, if there is a discrepancy between generally accepted accounting standards and tax provisions, the company must prioritize compliance with tax laws. This is because the tax is a liability (compliance tax).