Taxes reading in FSA (Don't see the big picture) accounting, understand, difference

noel

Hi,
Would a good samaritan explain to me, in not too many sentences, the whole reading? (taxes payable…). The thing is that I get conffused when it starts talking about taxes, accounting taxes, financial statement taxes… You may think that I shouldn’t be studying for this exam if I even don’t understand that. But it is just that in that 3rd book what I don’t understand: The logics of taxes in fsa.
It may be that I don’t really understand the difference betwen FSA and Accounting …. I dont know.
Thanks
CB

bcp901

I would also add the philosophy is that govt is so big and slow that it may be slow to adjust tax law to the actual mechanics that we see in the market everyday. The end result of financials vs. tax have 2 different end goals. The first is to determine if the company is a viable investment entity and to what extent, and the govt is taxing commerce with no regard to invesment, ownership, credit, etc. So they have different reasons to view income in different ways. Unfortunately for me, some of my clients have CPAs that simply minimize taxes for their clients with no regard to credit, so when we view their financials, they reflect exactly what goes on the tax returns, ie minimize income. Which looks like a company that is barely squeaking by therefore a credit risk.

ninja1024

plain or peanut?
Thank you for your post CB1000, and to others for their helpful responses.
I HATED this reading and realized I was making a bigger issue out of it than it deserved  probably just b/c it included the word “tax”. There was much frustration at my first shot at the chapter end problems and got quite a few wrong, but reviewing the correct answers and how they came about helped to solidify these concepts for me.
The big issues: DTA vs. DTL, temporary vs. permanent differences, and valuation allowance. Get those down and move right along to the remaining finance topics, they’ll make you feel smart again.