Journal of Tax Research

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Main Financial statements are presented reports that users notice them more than others. Therefore, the information by these statements must be analyzed. On this basis, financial statements must be effective on the users’ decision making. Therefore, the assessment of financial statements, on the basis of the ability of tax prediction is being investigated. This research evaluates the relationship between the information and items of balance sheet, income statement, cash flow with tax. To this aim, with the use of correlation test, the relationship between the changes of the items of financial statements and the changes of tax in some companies in Tehran’s stock exchange are examined. Finally this research concludes that none of the items of financial statements can predict the tax. It means that there isn’t any correlation between the changes of items of financial statements and the changes of tax. If there exists a correlation, the ability of items for prediction will be analyzed and determined by simple and multiple regression method. The final result of this research is that although the items of financial statements can not predict the tax and three main hypotheses are rejected because of the differences between tax laws and accounting standards.

Keywords: Tax, Taxpayer, Tax auditing, Financial Auditing, Accrual and Cash Items of Financial statements, percentage of Changes of Items of Financial Statements, Percentage of Changes of Tax, Taxable Income

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