Which of the following statements explain the permanent differences between tax and financial accounting? i. Income is recognized in one period for tax and in another period for financial accounting. ii. Income is recognized for accounting but not for tax purposes. iii. Expenses not deductible for tax purposes are deductible for financial accounting. iv. An expense is deducted currently for tax but in a later period for financial accounting. a. ii only b. i and ii c. i and iv d. ii and iii

Which of the following statements explain the permanent differences between tax and financial accounting? i. Income is recognized in one period for tax and in another period for financial accounting. ii. Income is recognized for accounting but not for tax purposes. iii. Expenses not deductible for tax purposes are deductible for financial accounting. iv. An expense is deducted currently for tax but in a later period for financial accounting. a. ii only b. i and ii c. i and iv d. ii and iii

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 14GI

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Similar questions

The definition of gross income in the tax law is: All items specifically listed as income in the tax law All cash payments received for goods provided and services performed All income from whatever source derived All income from whatever source derived unless the income is earned illegally
Which of the following is not a cause of a difference between pretax financial income and taxable income in a given period? a. operating loss carryforwards b. permanent differences c. applicable tax rates d. temporary differences
Which of the following is an acceptable method of accounting under the tax law? The accrual method The hybrid method The cash method All of the above are acceptable None of the above
In relation to accounting for income taxes, which one of the following statements is correct? a. Tax expense is the sum of current tax expense plus deferred tax expense. b. All movements in deferred tax assets and liabilities are recognised in the statement of profit or loss and other comprehensive income. c. Current tax expense is the sum of tax expense plus deferred tax expense. d. Deferred tax liabilities are determined from deductible temporary differences.
1. A temporary difference arises when an element of income is reported for tax purposes in the period: a. After it is reported in financial income and before it is reported in financial income. b. After that is reported in financial income. c. Before it is reported in financial income. d. It will have no effect on the taxable amounts.
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.
I. TRUE OR FALSE. 1. The amount of tax expense reported in the income statement represents the amount of tax to be paid to the BIR. 2. Income tax expense is the sum of current tax expense and deferred tax expense (benefit). 3. Timing differences include all temporary differences, but all timing not differences are temporary differences. 4. Nontaxable income results to a temporary difference. 5. Income tax expense is increased when a deferred tax liability reverses.
1. The amount of income taxes that relate to financial income subject to tax is reported on the income statement as A. long-term deferred income taxes (credit) C. income tax expense B. current deferred income taxes (debit) D. income tax payable 2. An item that would create a permanent difference in pretax financial and taxable income would be A. using accelerated depreciation for tax purposes & straight line depreciation for book purposes. B. using the percentage of completion method on long-term construction contracts. C. purchasing equipment previously leased with an operating lease in prior years. D. paying fines for violation of laws. 3. Which of the following is the most likely item to result in a deferred tax asset? A. using completed contract method of recognizing construction revenue tax purposes, but using percentage of completion method for financial reporting purposes. B. using accelerated depreciation for tax purposes but straight-line depreciation for accounting purposes.…
Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes. For each item below, indicate whether it involves: 1. 2. 3. Use the appropriate number to indicate your answer for each. a. b. C. d. e. f. g. h. i. j. A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. A permanent difference. k. The MACRS depreciation system is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes for some plant assets. A landlord collects some rents in advance. Rents received are taxable in the period when they are received. Expenses are incurred in obtaining tax-exempt income. Costs of guarantees and warranties are estimated and accrued for financial reporting…
Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions. Code Letter Term Code Letter Term A. Future deductible amount H Deferred tax consequences B Income tax payable (or refund) I Future taxable amount Operating loss carryback Deferred tax liability D Valuation allowance K Temporary difference E Deferred tax asset Income tax expense (or benefit) F Operating loss carryforward M Deferred tax expense (or benefit) Taxable income Required: Indicate which term belongs with each definition by choosing the correct term. 1. The deferred tax consequences of future deductible amounts and operating loss carryforwards 2. A difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively X 3. Temporary…
Which of the following statements is / are correct?1. Some tax credits are refundable.2. Some tax credits are nonrefundable.a. 1 only.b. 2 only.c. Both 1 and 2.d. Neither 1 nor 2.
Which of the following is false? a. Under GAAP, deferred taxes are reported based on the classification of the asset or liability to which it relates. b. Under IFRS, all potential liabilities must be recognized. c. Under GAAP, the enacted tax rate is used to measure deferred tax assets and liabilities. d. Under IFRS, all deferred tax assets and liabilities are classified as non-current.