Two accounting entries are required for income tax,one to provide for the tax and one to pay the tax.If S Ltd wishes to provide for estimated income tax expense on 30 June 2012 of $146000,the correct entry is:

Question

Quizplus · Accepted Answer

The entry to provide for estimated income tax expense involves debiting Income Tax Expense and crediting Current Tax Liability. This is because the expense is recognized in the income statement, and at the same time, a liability is established since the tax is not yet paid. Therefore, choice A is the correct entry to provide for the estimated income tax expense.

Two Accounting Entries Are Required for Income Tax,one to Provide