Accounting Principles and Tax Law

Bird, P.A.
February 1965
Accountancy;Feb1965, Vol. 76 Issue 858, p140
Trade Publication
This article focuses on the issues surrounding accounting principles and tax laws in Great Britain. Inland revenue has been accused at one time or another of being responsible for most of the troubles that afflict mankind. Several of the accusations were justified while others, though unfounded, contained enough bits of truth to be misleading. Tax laws in Great Britain do not dictate accounting principles, unlike other nations. In the U.S., tax laws stipulate that the last-in-first-out method of stock valuation must be used in the books if it is claimed for tax purposes. The U.S. also have several governmental bodies to regulate their tax laws. The persuasive power of tax accounting rules on accounting reports could be reduced by several ways: the use of tax allocations, the creation of parallel sets of records and finally, the formulation and publication of generally accepted accounting principles. The effect of accounting treatment upon liability to income tax has been considered by the courts in a series of cases, each of which has been concerned with the payment net of tax of some form of annual payment out of a mixed fund of cash, which only part had been brought into charge to tax.


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