Question

What Will Be the Accounting Treatment of Income Tax Paid by the Proprietor?

Answer 1

Income tax paid by a sole proprietor is not considered as an expense that is done for generating revenue. Therefore, it is not treated as an expense out of profits, instead it is considered as a personal expense and results in reduction of capital.

Also read:

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• Difference Between Sole Proprietorship and Partnership
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• Sole Proprietorship