CMA Intermediate · Financial Accounting · Accounting for Taxes on Income (AS 22)
A company reports accounting income of Rs 10,00,000 before tax. Under AS 22, how is accounting income defined?
Accounting income is the net profit or loss for the period reported in the statement of profit and loss, before deducting income tax expense or adding income tax saving, so it is a pre-tax figure and differs from taxable income.
- ANet profit or loss for the period as reported in the statement of profit and loss, before deducting income tax expense or adding income tax savingCorrect
- BProfit computed under the Income-tax law after deductions
- CNet profit after deducting income tax expense
- DProfit after adding back all timing differences
Explanation
AS 22 defines accounting income as the net profit or loss as reported in the statement of profit and loss before deducting income tax expense or adding tax saving. It is the starting point, not the taxable income and not the post-tax profit.
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