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March 18, 2026The Accounting Review

The Nature of Taxes and the Matching Principle.

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Authors

DDDavid DrinkwaterMichigan State UniversityJEJames Don EdwardsRTX (United States)

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Implication

This analysis uncovers inconsistencies in tax reporting in accounting, implying a need for uniform practices.

Key Points

  • The research explores the implications of tax allocation practices in accounting and questions their fairness and consistency.
  • Theoretical analysis of tax allocation and accounting principles.
  • Empirical review of corporate balance sheets regarding deferred tax reserves.
  • Comparison of firms using different tax reporting procedures.
  • Many corporations show large deferred Federal income tax reserves on their balance sheets.
  • Firms not using tax allocation report higher earnings than those that do.
  • Inconsistencies in tax reporting practices create challenges for comparing financial statements across industries.

Cite This Study

Drinkwater et al. (1965) studied this question.

synapsesocial.com/papers/69ba420a4e9516ffd37a1e90https://doi.org/10.2308/tar-4482787
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1Tax Allocation: A Macro Approach.1965
  2. 2Difficulties in Tax Allocation on General Price-Level Increases.1968
  3. 3Tax Allocation in Perspective.1966
  4. 4Misleading Tax Figures--A Problem for Accountants: A Reply.1978
  5. 5Tax Allocation and Non-Historical Financial Statements.1969