會計adjustment

Provision for taxation is made after a company has finalized its profit and loss account, and made an estimate for the amount of tax it is going to be paid. The entry is

Dr. P&L 150
Cr. provision for taxation 2005/06 150
Setup of tax provision for 05/06

When provisional taxation is paid, cash is credited, and the provision for taxation is debited, often by 2 instalments:

Dr. Provision for taxation-05/06 75
Cr. Cash-1st instalment 75
Payment of 1st instalment

Dr. provision for taxation-05/06 25
Cr. Cash 25
Payment of 2nd instalment

At this stage the final tax will be known, say, if total tax payable=110 is assessed by the Inland Revenue Department, then there will be an over-provision of 150-110=40. This $40 will need to be reversed back to the P&L at the end of the accounting year since it no longer required. (It is easier for you to work out the over-/under-provision if you open separate provision for taxation accounts for 2005/06 and 2006/07 as draft T-accounts}. When you provide the estimated taxation for the 2006/07, you probably will make the following entries:

Dr. P&L-prov for 2006/07 800
Cr. Provision for taxation 2006/07 800 (say)

Dr. Provision for taxation 2005/06 40
-over-prov reversed to P&L
Cr. P&L -reversing over-prov 05/06 40

Most textbooks will not separate the provision of taxation into 2 separate accounts for each year; hence you might see a single entry to Dr. 760 to P&L and Cr 760 to a combined "provision of taxation" account.

*Most often you don't have a "prepaid taxation" account separately, since this might be netted off by a later year tax provision. Any balance in the provision of taxation account will be shown as asset "tax recoverable” if Dr., and as a liability "tax payable" if the balance is credit.

年結時入賬，通常薄記員無入，會計師會做調整
Dr. Taxation
Cr. Prov for taxation

到交稅時， 包括預繳都入
Dr. Prov for taxaton
Cr. Bank

至於Prov for taxation 條數唔會同taxation 條數，因為預繳稅及如該年度購入固定資產都有影響