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an example given is a follows:
“sale of goods revenue is included in the accounting profit when the goods are delivered, but only included in taxabale profit when cash is received”
i thought sale of goods is booked as either a debit to Trade Receivables or Cash, and a credit to Revenue. which means that the revenue will have been taxed.
so why the temp diff??
Because, in working out the liability for taxation, adjustment will be made to the accounting results to arrive at the taxable profits and then the tax rate is applied to those profits subject to corporation tax
The example you have quoted is precisely illustrating the temporary difference where the taxman is working on a cash basis whereas for accounting purposes we work on an accruals basis
OK?
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