ExpertEasy2 marksMultiple Choice
ACCA · Question 08 · Corporation tax liabilities
Section A
Titanium Forge Ltd, a heavy manufacturing company, prepared its financial accounts for the 14-month period from 1 January 2023 to 28 February 2024.
How will this period of account be divided into accounting periods for Corporation Tax purposes?
Section A
Titanium Forge Ltd, a heavy manufacturing company, prepared its financial accounts for the 14-month period from 1 January 2023 to 28 February 2024.
How will this period of account be divided into accounting periods for Corporation Tax purposes?
Answer options:
A.
A single 14-month accounting period.
B.
Two 7-month accounting periods.
C.
A 12-month accounting period to 31 December 2023, and a 2-month accounting period to 28 February 2024.
D.
A 2-month accounting period to 28 February 2023, and a 12-month accounting period to 28 February 2024.
How to approach this question
Remember the rule for long periods of account: an accounting period cannot exceed 12 months. The first accounting period is always the first 12 months, and the second accounting period is the remainder.
Full Answer
C.A 12-month accounting period to 31 December 2023, and a 2-month accounting period to 28 February 2024.✓ Correct
For Corporation Tax, an accounting period cannot exceed 12 months. When a company prepares accounts for a period longer than 12 months (a long period of account), it must be split into two accounting periods. The first accounting period is for the first 12 months (1 Jan 2023 to 31 Dec 2023), and the second accounting period covers the remainder of the period (1 Jan 2024 to 28 Feb 2024).
Common mistakes
Splitting the period equally or putting the short period first.
Practice the full ACCA TX — Taxation Practice Exam 2
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