[Oneday]

Hi. I use UWorld Roger CPA Review material as a main source and have supplementary source (flash card note) from Wiley.

I have found that there is a conflicting info that I want to verify.

The chart under the page 19-1 in 2016 roger book shows the calculation for “Tax Payable” (at the very end of the chart).

However, on my supplementary wiley material, it says:

Current Income Tax EXPENSE = Tax income x Current Tax Rate

Current tax liability = current income tax expense – Estimated Payments.

Converting the Roger’s chart to what Wiley has put down:

Current Tax LIABILITY = Taxable Income x Current Tax Rate

TAX PAYABLE = Current Tax LIABILITY – Prepayment

You can see two problems on this:

1. Wiley use the wording “current income tax EXPENSE” while Roger use “current income tax liability”

2. And Wiley use the wording “current tax liability” where Roger puts “tax payable”

I am assuming that “prepayment” and “estimated payments” is same thing (let me know if it is not).

Which is the correct wording?

[Missy]

They are both correct and not conflicting. Expense is an income statement account and liability is a balance sheet account. A payable account is a type of liability, and those terms can be used fairly interchangeably, all payables are liabilities but not all liabilities are payables, in a sense. When you enter the current period taxes you debit tax expense and credit tax liability. When you pay the taxes you debit tax liability and credit cash.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Oneday]

Thank you so much. I was totally offguarded on that..

[Author]

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