Taxation Essay Example | Topics and Well Written Essays - 2750 words - 2

Taxation - Essay ExampleThe conceptual framework of accounting holds accounting theories related to receipts together. The framework establishes goal and objectives of financial reporting by businesses. Financial accounting information provides useful information for making business and scotch decision much(prenominal) as taxation (Riahi-Belkaoui, 2005, p. 121). The theory that financial reporting should avail signifi undersurfacet information for taxation recognizes that reporting does not exist out of the legal, economic, political, and social environment. The conceptual framework of accounting ensures that accounting information in relation to taxation is relevant, comparable, reliable, and consistent (Bebbington, Gray & Laughlin, 2001, p. 97). Comparability and consistency of taxation benefit from havingGenerally true Accounting Principles (GAAP). Adhering to financial statements to GAAP in relation to taxation means, they are consistent from year to year and the tax differenc e between various companies can be compared. Therefore, the accounting theories help in practical analysis of taxation in a business.The accounting theories of taxation function on four assumptions. The economic entity assumption illustrates that the practices of a business are distinct from the actions of the owner. It means that tax is computed separately for the companys profit generation. In addition, the income tax of an employee is distinctively metrical in relation to the amount of salary gained. The going concern assumption states that when financial statements are prepared, the accountant assumes that the company will move without threat of annihilation or bankruptcy (Riahi-Belkaoui, 2005, p. 97). Therefore, it means that the likely taxable amount is already catered for in the financial statements hence in the event of taxation, the business does not heart any