What distinguishes constructive obligations from legalobligations in accounting?a) They arise from established patterns of past practiceb) They only exist in written contractsc) They never require recordingd) They apply only to tax liabilities

Explanation of Constructive Obligations: Constructive obligations are commitments that arise from…

Answered: What distinguishes constructive…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter17: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 6DQ

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Similar questions

Which of the following is a temporary difference that normally is recognized for accounting purposes before being reported as an expense for tax purposes? Unearned revenue Product warranty costs Depreciation Fines resulting from violations of the law.
Select accurate Option
Which of the following is not an administrative remedy available to the government? a. Assessment b. Distraint C. Tax Avoidance D. Tax Lien
Which of the following statements about Loss Contingencies is TRUE? According to the practice of accounting conservatism, contingency losses do not have to be accrued until they are confirmed, while contingency gains have to be recorded when the event confirming their receipt is probable. Remote Losses do not require disclosure. According to the U.S. GAAP, a loss contingency must be accrued by a charge to income if any of the two conditions is met: 1) it is probable that an asset has been impaired, or a liability has been incurred at the date of the financial statements; 2) the amount of the loss can be reasonably estimated. If a loss is probable but cannot be estimated, it shall not be disclosed in the financial statements.
A contingency that need not be disclosed in the financial statements or in the notes thereto is: a. pending litigation. b. possibility of strike. c. deficiency tax assessment. d. note receivable discounted.
None
How does unearned revenue arise? Why can it be classifiedproperly as a current liability? Give several examplesof business activities that result in unearned revenues.
Classify the following items that may cause discrepancy between accounting profit and taxable income, into the following types of differences. Also, provide an explenation why that is their classification. A. Non-deductible expenses B. Non-taxable revenues C. Deductible temporary difference D. Taxable temporary difference Interest earned on investments in tax-exempt government securities. Interest earned on deposits with bank. Excess of profit earned over the profit reported under the installment method for income tax purposes.
Which of the following statements is NOT correct? A. Taxable income and accounting profit may differ due to differences between the recognition of revenue and expenses for tax and accounting purposes. B. Deferred tax assets must be assessed for the probability of their recovery. Creation of a deferred tax asset or liability occurs only if it reverses at some future date. OC. Deferred tax assets and liabilities may arise due to temporary differences between accounting profit and taxable income. D. Deferred tax liabilities may arise due to permanent differences between accounting profit and taxable income.
Explain thoroughly why it is the answer.
Some items are treated as a deduction for tax purposes when they are paid but are recognised as expenses when they are accrued for accounting purposes. Which of the following items are of that type? a. Warranty costs b. Goodwill impairment c. Fines d. Entertainment expenses e. Prepaid insurance
True or False. The Internal Revenue Code authorizes deductions for trade or business activities if the expenditure is "ordinary and necessary"

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What distinguishes constructive obligations from legal obligations in accounting? a) They arise from established patterns of past practice b) They only exist in written contracts c) They never require recording d) They apply only to tax liabilities