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Influence Of Rules For Computing Corporate Income Tax On The Accuracy Of Financial Statements Of Lithuanian Companies

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  • Gintaras CERNIUS
  • Liucija BIRSKYTE
  • Arturas BALKEVICIUS

Abstract

Companies in Lithuania have to follow Business Accounting Standards (BAS) when preparing their financial statements. Recording financial transactions according to BAS ensures that the information a company shares with potential lenders and investors gives a true and fair view of its business situation. However, the tax law prescribes its own set of accounting rules, which can result in a difference between what a business shows in financial statements and what it reports on its tax returns. This paper examines whether Lithuanian companies predominantly use tax accounting principles that migrate into their financial statements to create an inaccurate picture of business performance. The method of experts’ evaluation was chosen for that purpose. The results indicate that Lithuanian companies tend to heavily rely on accounting principles prescribed in corporate income tax law thus distorting information contained in financial statements. The paper contributes to the scarce literature on this issue of high relevance to both academics and practitioners. JEL Codes - O21, C45, P24

Suggested Citation

  • Gintaras CERNIUS & Liucija BIRSKYTE & Arturas BALKEVICIUS, 2016. "Influence Of Rules For Computing Corporate Income Tax On The Accuracy Of Financial Statements Of Lithuanian Companies," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 63(1), pages 65-81, March.
    • Handle: RePEc:aic:saebjn:v:63:y:2016:i:1:p:65-81:n:20
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    References listed on IDEAS

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    More about this item

    Keywords

    accounting principles; financial statements; corporate income tax; Lithuanian companies;
    All these keywords.

    JEL classification:

    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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