STUDENT CODE:_______ NAME:________________________________________ CHAPTER 04 - Income Tax Schemes, Accounting Periods, Methods, and Reporting

Source(s): INCOME TAXATION | 2019 EDITION | REX B. BANGGAWAN, CPA, MBA Professor: JAYPAUL OCAMPO ACIDERA, CPA
STUDENT CODE:_______ NAME:________________________________________ CHAPTER 04 - Income Tax Schemes, Accounting Periods, Methods, and Reporting
CASH BASIS Income ACCRUAL BASIS Income
Cash income P xxx,xxxx Cash income P xxx,xxxx
Advanced income xxx,xxxx **Advanced income xxx,xxxx
Accrued (uncollected) income xxx,xxxx
Gross income P xxx,xxxx Gross income P xxx,xxxx

CASH BASIS Expense ACCRUAL BASIS Expense

Cash expenses P xxx,xxxx Cash expenses P xxx,xxxx
*Amortization of prepayments & Amortization of prepayments &
xxx,xxxx xxx,xxxx
^Depreciation of capital expenditures ^Depreciation of capital expenditures
Accrued (unpaid) expense xxx,xxxx
Gross income P xxx,xxxx Gross income P xxx,xxxx

NOTE:
* Should be PREPAID EXPENSE under the cash basis of accounting.
For taxation purposes , Prepaid Expense is NOT DEDUCTIBLE OUTRIGHT (i.e. deductible in future period where they expire or used)
** Should NOT be included under the accrual basis of accounting.
For taxation purposes , Advanced Income is TAXABLE UPON RECEIPT
^ Special tax accounting requirement must be followed (e.g. straight-line depreciation for capital expenditures).

Source(s): INCOME TAXATION | 2019 EDITION | REX B. BANGGAWAN, CPA, MBA Professor: JAYPAUL OCAMPO ACIDERA, CPA