Financial statements specify the details of all income earned and spent by the company. Thus, it includes all profits and losses, and therefore states all expenses which are related to taxes. The statement includes information about the company’s pre-tax income; it also takes into account the subtraction of any tax payments so that the company’s net income after taxes have been paid can be determined. The use of financial statements therefore allows companies to more accurately estimate their income tax liabilities.
The cash flow statement also includes information about the tax expenses of the company. The details of the company’s tax expenses include both long-term and short-term tax liabilities. After taxes have been paid during the cash flow period which had been mentioned in the statement, the resulting change will be shown as a decrease in the amount of tax money which has been paid.