How to Prepare Accounting Entries for Accruing Enterprise Income Tax
When an enterprise accrues enterprise income tax, it should set up an income tax expense account and a tax payable account for accounting. How should relevant accounting entries be prepared?
Processing of accrued enterprise income tax entries
Debit: income tax expense
Credit: tax payable - income tax payable
Related to deferred income tax:
Accrual time
Debit: income tax expense
Deferred income tax assets (or credits)
？ ？ Credit: tax payable - income tax payable
Deferred income tax liabilities (or debit)
At the time of payment
Debit: tax payable - income tax payable
Credit: bank deposit
What does enterprise income tax mean?
Enterprise income tax is a kind of tax levied on the production and operation income and other income of enterprises engaged in production and operation in China and other income earning organizations within a certain period of time. These organizations include foreign-funded enterprises and foreign enterprises, but do not include sole proprietorship enterprises and partnerships.
Basic formula:
Income tax payable=income tax payable * applicable tax rate - tax deduction - tax credit
Direct method: taxable income=total income - non taxable income - tax-free income - various deductions - losses of previous years
Indirect method: taxable income=profit+tax adjustment increase - tax adjustment decrease
Accounting profit=taxable income=accounting profit+tax adjustment increase - tax adjustment decrease
The enterprise income tax is calculated and paid according to the taxable income (profit after tax adjustment).
Note: The income tax is accrued because the enterprise income tax is paid once a year, and usually it is only prepaid quarterly, which is different from the turnover tax that needs to be declared every month. The prepaid enterprise income tax enables enterprises to understand their monthly income tax expenses, which conforms to the accrual system.
An enterprise may prepay the enterprise income tax monthly or quarterly, that is, within days from the end of a month or quarter, it shall submit to the tax authorities a tax return for the enterprise income tax prepaid and prepay the tax. Within the period of final settlement and payment of enterprises, that is, within five months from the end of the year, the tax return of enterprise income tax for the current year shall be submitted to the tax authority for final settlement and payment, and the amount of tax payable and refundable shall be settled.
