Taxation
Income tax expense represents tax relating to taxable profit under applicable accounting rules and law. For basic financial statements, distinguish the current period's tax expense from amounts paid and the closing liability. If an opening liability of 80 is settled and a current charge of 100 remains unpaid, the cash paid is 80 while the closing liability is 100.
Worked example
A current tax charge of 100 reduces profit after tax by 100.
Common mistake
Tax expense and tax paid can differ; a tax liability is a reporting-date balance, not the same measure as expense.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| FIA | FFA | Direct | September 2026–June 2027 |