Tax and financial accounting is handled differently. Tax accounting is preparation of financial statements and records to satisfy tax authorities’ requirements for tax required. During this empowerment, it focuses on the deductions, credits and tax returns compliance with tax laws. Financial accounting, on the other hand, is all extensive as it prepares a detailed picture of a company financial health to all the stakeholders of the company like shareholders, creditors and management. Depending on the source of the data, the data may follow GAAP or IFRS accounting standards, reporting on, for example, its revenue, expenses and financial position. The financial accounting takes into consideration total performance of a firm, while the tax accounting focuses only on tax.
