Any novice specialist in the field of finance sooner or later asks the question of how exactly the concepts of accounting and tax accounting differ from each other. The second topic of interest to future financial workers: how to bring these two types of workflow closer to each other? This is what will be discussed below.
The difference between accounting and tax
In fact, the processes for maintaining these two reports are very similar, but there are also nuances. The first factor that distinguishes accounting and tax accounting is the purpose for which the manipulation is carried out. Tax accounting is a measure of generalization of data intended to identify the extent of the taxpayer base and the amount of tax deduction. The basis for accounting is documentation that is compiled on the basis of the tax code of the Russian Federation.
The next significant difference between accounting and tax accounting is, first of all, that the second regulates how much percent of the tax is deducted from the whole number and how much “net” profit remains as a result.
The most important regulatory act, the rules of which should be followed when conducting tax accounting, is the document adopted on December 6, 2011, which is designated as the Federal Law “On Accounting”. It is worth telling in more detail how exactly this type of reporting is regulated in this document.
Accounting
The term “accounting” refers to the process of generating the most detailed reporting, which clearly shows what level of income and expenses the organization has achieved over a certain time period (most often for 1 calendar year). It is on the basis of this document that one can judge with a high probability of correctness about what outcome awaits the enterprise in the future. Will he take depreciation into account in tax and accounting or not. As well as how the company will develop.
The disadvantage of tax accounting is that when compiling this documentary base it is not possible to predict the success or failure of an organization.
Financial operations
A good example of such a difference between tax and accounting is that the implementation of all major financial transactions is in no way possible without well-written documentation. Also, this kind of report is necessary in order for a large enterprise to declare its right to participate in a tender or special auction. The role of financial statements is to demonstrate at what monetary level a particular company is located.
Following from the Federal Law “On Accounting”, for the owners of the enterprise, drawing up a report is an opportunity to make a collective decision about which of the employees at the moment should occupy leadership positions.
Tax accounting, in turn, was created to thoroughly control how responsibly employees pay taxes. The financial statements are designed to regularly record amounts spent on household and business activities. Very often this type of reporting is practiced in educational institutions.
Deduction accounting
Sometimes some organizations start not only financial, but also tax reporting.This is done in order to calculate the tax base related to income tax.
I must say that the classification of income in the accounts of tax and accounting is not identical, but has a certain list of differences. For example, in the first case, usually not only “internal” financial assets are involved, but also those funds that have been utilized in the process of investments in the budget of other enterprises that have the same line of work.
The fact described above is confirmed by paragraphs No. 5, and also No. 7 of article No. 9/99 of the financial code of Russia. At the same time, it is possible to classify the organization’s income either as main, if it is the main financial source, or as additional if it is auxiliary.
Financial management
When tax accounting, those funds that are invested in direct shared management and ownership, it is customary to attribute to the group of income called non-operating. This is not just a requirement, but a legally confirmed rule. The information on this legislative act is registered in paragraph No. 1 of the article under number 250 of the tax code of the Russian Federation.
In addition, the list of incomes that are not included in the corporate income tax base is expanding significantly. This includes property that is a voluntary donation from an individual or legal entity. The increase in prices over the initial cost of a service or product clearly demonstrates the type of voluntary investment.
Another hallmark of tax and accounting at the enterprise is the date when the statements were officially recognized by the higher financial institutions.
Features of tax accounting
It is possible to compile tax accounting not only with the help of accruals, but also using cash registers. In the case of the financial variety of reporting, such activities cannot be carried out as required by the rules. However, a tax report can be prepared both manually and when using the cash register. However, there is still one significant “pitfall” hiding in a possible discrepancy in the dates of recognition. This factor must be taken into account in any case. The accrual accounting method for the most part is not kept by those who have the status of an individual entrepreneur.
Expenses include those funds that are allocated by reducing the level of income from the activities of the organization or individual (IP). It also includes the appearance of serious debt obligations of an internal (between employees) or external (to another company) nature. This does not include the case when the budget amount has been reduced due to mutual benefits.
According to Russian law, the disposal of financial assets cannot be recognized as expenses of the organization, which may be included in the financial statements. In addition, it does not include waste associated with the acquisition or creation of financial assets that are considered extraordinary. In addition to this, the same group includes contributions that were addressed to the budget of other organizations. You can also include funds recorded in the statements under the commission agreement. Such documents may be concluded in favor of the principal, principal and so on. It is also possible when the accounting statements include expenses for payment for services, materials, as well as for the acquisition of material assets. This also includes advance payments for the provision of goods or a certain type of service. Repayment of loan obligations is also included in the list of circumstances for the preparation of financial statements. In order to make a comparison of the two types of documents, you need to understand how revenue recognition is carried out in the financial and tax report.Those funds that have been spent on the needs of the enterprise and are necessarily supported by the necessary documentation are officially considered as expenses, which corresponds to paragraph No. 1 of article 252, which relates to the tax code of Russia.
The concept of tax and accounting
Reasonable costs are officially recognized costs that have been estimated and translated into cash. The costs that had to be borne in order to extract more significant income were justified. For example, such expenses are considered finances for which the shares of oil production were exchanged. When considering accounting, it becomes clear that for cost recognition, each cost must be documented. Other reasons for making expenses in the financial statements are described in detail in paragraph 16 of PBU 10/99. It is customary to make an expense solely in accordance with the requirements that are found in the extracts from legislative acts and treaties. It also matters that the amount of expense be clearly defined.
In addition, it is important that there is confidence that after a specific monetary manipulation the financial benefits of the organization will be significantly reduced. This situation arises primarily when a financial asset is transferred to competitors. If any of the above points of the organization is not fulfilled, a large amount of receivables is automatically assigned.
findings
Taking into account the above circumstances, we can conclude that at the stage of recognition of expenses, the information contained in the tax and financial statements may be approximately the same.
There are discrepancies in accounting and tax accounting for expenses. There are both direct and indirect types. “Direct” refers to wages, sick leave payments, vacation pay and other payments given personally to the employee. As for indirect costs, these include payment of rent and utility bills for maintenance of the premises.
Conclusion
This article has been described in detail what is called "for dummies" accounting and tax accounting and their differences. But still, for a deeper understanding of these areas, you need to study more serious literature.