Temporary differences: The difference between the actual taxable liability and the books of records maintained by an individual, a firm, or an entity is termed as a temporary difference. The difference is caused due to the tenure of transactions or the actual performance of transactions, flow of funds into the business, or changes in the value of the asset or liability due to business situations. These differences are adjustable in the future when the appropriate time for the transaction arises. Taxable income: Income that is computed after all allowable or permissible deductions are made from pretax financial income is called taxable income. In other words, taxable income is eligible for computing the tax liability. To identify: To identify the difference between future taxable amount and future deductible amount.

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Chapter 19, Problem 7Q

To determine

Temporary differences: The difference between the actual taxable liability and the books of records maintained by an individual, a firm, or an entity is termed as a temporary difference. The difference is caused due to the tenure of transactions or the actual performance of transactions, flow of funds into the business, or changes in the value of the asset or liability due to business situations. These differences are adjustable in the future when the appropriate time for the transaction arises.

Taxable income: Income that is computed after all allowable or permissible deductions are made from pretax financial income is called taxable income. In other words, taxable income is eligible for computing the tax liability.

To identify: To identify the difference between future taxable amount and future deductible amount.

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