Accounting is a process of identifying, recording, classifying, processing, and presenting financial transactions or activities to interested parties. Commercial accounting or financial accounting is the process of preparing financial statements in accordance with the regulations of financial accounting standards. Meanwhile, tax accounting is the process of preparing financial statements in accordance with the regulations of tax laws. So that the financial statements produced are called fiscal financial statements. Meanwhile, if your company requires experts of bookkeeping, perhaps you must hire the trusted xero bookkeeping services near your area.
It’s because based on accounting principles, general or commercial accounting and tax accounting have similarities. Well, here are 5 similarities in commercial and tax accounting:
1. Qualitative Characteristics
The first similarity between general accounting and tax accounting is the relation to its qualitative characteristics. The qualitative characteristics of tax and commercial accounting include:
Relevant, as for the requirements of relevant financial information, among others: Having feedback (feedback value), having predictive value, timely and complete.
Reliable, if the information: Presented honestly, verifiable, and neutral.
Can be compared, solid information compared between periods or between entities.
Understandably, information can be understood by all users.
2. Accrual System
In general or commercial accounting, accounting standards used are accrual systems. Similar to general accounting, tax accounting also applies an accrual system. In tax, accounting is allowed to use a mixed system (cash and accruals) but with due observance of applicable regulations.
3. Balance Sheet
Balance sheet financial statements in general accounting and tax accounting are the same which consists of assets, debt, and capital.
4. Concept of Business Unity
Another equation is in terms of the principle of business unity. Both fiscal and commercial accounting adhere to the principle of business unity, which means that there is a separation between assets or assets from owners and companies.
5. Realization Principles
In addition to applying the principle of business unity, other equations are the principle of realization. Both types of accounting both apply the principle of realization and so forth.