Business Tax

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Events that occur after the Accounting Period end date

Events that occur after the Accounting Period end date

Events can happen in the time between the reporting period date on the annual accounts to the business owner’s approval of the accounts to be issued; it is to be expected in some cases. Where an event does occur, an adjustment can be made to the accounts or a disclosure can be included with the figures to reflect the event. How the accounts are adjusted depends on the situation of the event itself, as per the International Accounting Standards 10 (IAS 10). The IAS collective are part of the International Financial Reporting Standards (IFRS) which have been adopted 166 jurisdictions and are followed by accountancy practices within those jurisdictions.

Deferred Tax and Investment Properties
Income tax is calculated on the profits of the business within an accounting period. The profits involved are usually for goods and services supplied to customers, but some companies will buy property with a view to earn rental income or to sell in a few years when prices have increased and will make a profit this way. Anticipated tax to pay on the sale of the property can be calculated while the property is owned by the company and shown on annual accounts as ‘deferred tax’.
How is a Lease shown on the Annual Accounts
If there is a lease involved it is required for the lease to be categorized as either a finance or operating lease. A finance lease will appear on the balance sheet of a set of annual accounts but an operating lease will not. Due to the treatment of each lease and how it affects the accounts, the correct category is important. An accountant will be able to determine the treatment when preparing the accounts.
The Importance of Company Budgets
Budgets are a major part of the planning process for the business. Specifically they are a short-term plan to outline what the business wants to achieve by the end of the period. It’s common for a budget to run for twelve months and cover a calendar or financial year. While this creates a clear guide for the managers for the year ahead, the rigid twelve months is a long commitment period. Major events can happen within that time that the budget won’t have accounted for so if the plans deviate significantly this can cause knock-on effects for the remainder of the budget and plan.
Decision Making in a Business
Running a business and being involved in the day-to-day management brings its own set of responsibilities, including decision-making. It will be directors, owners and managers who help to make the more long-term decisions for the business’ growth and such decisions should not be made lightly. The decision-making process needs to have planning and control in consideration to help satisfy the objectives.

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