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…

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter3: Business Income And Expenses

Section: Chapter Questions

Problem 1MCQ

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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.
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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.
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"
A debt restructuring that involves a modification of terms and does not require court approval may not require the recognition of subsequent interest expense. True or False
Why should executory contracts be disclosed in the financial statements? Group of answer choices They create current income tax obligations They create an obligation contingent upon the occurrence of a past event They represent a possible outflow of economic resources None of the above PreviousNext
Which of the following need not be disclosed in the financial statements or the notes thereto? Possible loss as a result of unspecified business risk Probable losses not reasonably estimable Possible assessments of additional taxes Guarantees of indebtedness of others, outflow of resources is reasonably possible
Which of the following statements explain the permanent differences between tax and financial accounting?

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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