TAX NOTES AS LIABILITY OFFSETS.
The article highlights that the tax notes were presumably purchased with the intent that they be used for the payment of federal income and excess profits taxes, it is also good accounting practice that they are shown as a deduction from the accrued liability for such taxes in the current liability section of the balance sheet. The purpose of this article is to investigate the current popularity of this alternative treatment of U.S. government securities in corporate balance sheets and to reexamine the argument for allowing Treasury Tax notes as deductions from accrued tax liabilities. The data required for this study are derived primarily from the 1950 balance sheets of 107 large non-financial corporations. From the information furnished by this sample, some idea can be obtained as to the extent to which government securities are employed as liability offsets and the effects this practice may have on financial ratios, particularly the current ratio. In the opinion of the writer, this way of handling tax notes runs counter to the much publicized accounting doctrines of full disclosure and consistency or comparability.
- DOI
- 10.2308/tar-7086925
- Volume
- 28 (4)
- Pages
- 545-549
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref