What Is Income Tax Payable On A Balance Sheet
Income tax payable is a type of account in the current liabilities section of a company s balance sheet.
What is income tax payable on a balance sheet. Taxes payable a liability account is a balance sheet item not an income statement component. It is compiled of taxes due to the government within one year. Until it is paid it remains as a liability.
When you actually pay the income tax liability you will debit income tax payable and credit cash. Government as of the balance sheet date for the federal income taxes withheld from its employees salaries and wages. Income tax payable is a liability account that is shown on the balance sheet.
Federal income tax withholdings payable definition. When a business receives a bill from a revenue agency a bookkeeper debits the income tax expense account and credits the income tax payable account the other name for the accrued income tax account. Any income tax payable within a longer period is instead classified as a long term liability.
Balance sheet to understand why taxes payable are part of a corporate balance sheet it s useful to master the report s components as well as how accountants distinguish items based on maturity and operating life. Income taxes payable a current liability on the balance sheet for the amount of income taxes owed to the various governments as of the date of the balance sheet. When you do your adjusting entry each period and debit income tax expense you will credit income tax payable.
This current liability account reports the amount a company owes the u s. The income tax payable is usually classified as a current liability in the balance sheet since it is normally payable to the applicable government s within one year.
