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Does it make it easier for a company to provide for tax if they prepare annual accounts?


Please answer and share your opinions. Thank you very much!

So this is a homework help question?

Company's prepare annual accounts for many reasons, primarily to satisfy legislative requirement (here in the UK for the purposes of the Companies Act), to arrive at a profit figure to adjust for taxation purposes but also so it's directors and shareholders can gauge performance.

For taxation purposes the figure in accounts normally needs to be adjusted to take into consideration differences in accounting principles and tax legislation. Once these adjustments have been made the company can pay the correct amount of tax.

In the UK, companies have a requirement to pay tax before the requirement to file a tax return and their annual accounts. To do this they have to have a fair idea of the amount of tax to pay on account. They can calculate this by preparing their accounts early, or if this is not possible, making an estimate. One of the ways of doing this is to look back at previous accounting periods and look at the amount of tax paid from similar results, or by taking estimates from management accounts prepared on a monthly or quarterly basis.

Most medium to large companies use a computerised records system that will produce these.

I'm sure you can get better information from heading down to your local library and taking out an accountancy manual.
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