- 20 Marks
ATP – Feb 2016 – L2 – Q2 – Tax Accounting Principles
Explain tax provisions for cash-basis and accrual-basis accounting under Internal Revenue Act, 2000 (Act 592).
Question
The application of tax accounting principles and taxation rules for determining income has been made flexible by Section 25(1) of the Internal Revenue Act, 2000 (Act 592), as amended which states that “Subject to this Act, for the purposes of ascertaining a person’s income accruing or derived during a basis period, the timing of inclusions and deductions shall be made according to generally accepted accounting principles.”
You are required to explain to a prospective investor the tax provisions regarding cash-basis accounting and accrual-basis accounting in the light of the above-mentioned provision of Act 592.
Find Related Questions by Tags, levels, etc.
- Tags: Accrual Basis, Cash Basis, Income Tax, Tax Accounting, Tax Compliance
- Level: Level 2
- Topic: Tax Accounting Principles
- Series: FEB 2016
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