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My accountant did not provide tax liability for year 2022 and that ended to incorrect closing balance of retained earnings to carried forward in 2023. How advisable to show tax of previous year under "prior period adjustments"? Is there any better option to declare it?
The best practice is to amend the previous year's corporate tax return to correct the error. It should not trigger an audit since there will not be any change to the taxable income. If you are uncomfortable doing this, then record the amount in this year's "Current Income Tax Expense." The current income tax expense is a non-deductible item, which is the way it should be. Do not make an entry to the Prior Period Adjustment account because this could trigger an audit.