Net income is as earnings before interest and taxes EBIT

Although certain lines of an income tax return is dependent on estimates or projections, interest expenses line is a basic equation. When accounting for income tax expenses, however, a company may use different accounting methods some expenses that it uses to calculate the taxable income. The hypothetical amount of taxable income, if the accounting methods were used in the tax return is calculated. Based on this hypothetical taxable income tax is then fitured. It in income in the statement of income tax expense. This amount is reconciled with the amount of tax due based on the accounting methods used for income tax purposes. A reconciliation of the two amounts different income tax is then provided a note on the income statement.

Net income is as earnings before interest and taxes (EBIT) and can vary considerably depending on the accounting methods used to report income and expenses.This is smoothing profit which may come into play to manipulate gains.Lissage crosses the line select acceptable accounting methods of the list of GAAP and implementation of these methods in a reasonable manner in the area shaded compensation management involves the manipulation of the accounting profit.

It is the responsibility of managers and business owners to be involved in the decisions that the accounting methods are used to measure the benefits and how these methods are actually implemented.A handler can be required to answer questions on the financial reports of the company repeatedly.It is therefore essential that any officer or Manager in a company be thoroughly familiar with how the financial statements of the company are préparés.Méthodes accounting and how they are implemented vary from business to business business methods can fall anywhere on a continuum that is either left or right of the Centre of GAAP.