I'm studying financial reports. There is a section on Yahoo Finance that contains gross profit, net income, total revenue, etc..

How does a company know how much tax it should pay? Is it based only on accounting practices for financial reports (income statement + balance sheet) or does the company pays its taxes based on some other statements (ex. bookkeeping) and financial reports only for investors where company just says how much tax they have paid?

In other words, if tax officials want to check how much tax the company should pay, where will they will look?


Companies, just like people, have to complete and file tax forms. The items and numbers are directed by the applicable tax laws in the various jurisdictions they operate in. Taxes could include income, sales, real estate, and employment taxes. Forms could be submitted to multiple nations, states, and local authorities.

The financial reports and the tax forms reflect two different views on the same data. They are governed by different rules and laws.

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