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Chapter 17 - Accounting for Income Taxes Chapter 17 Accounting for Income Taxes True / False Questions 1. ASC 740 governs how a company accounts for all taxes it incurs. True False 2. ASC 740 is the sole source of rules related to accounting for income taxes. True False 3. Temporary differences create either a deferred tax asset or a deferred tax liability. True False 4. Publicly-traded companies usually file their financial statements before they file their federal income tax returns. True False 5. The Emerging Issues Task Force assists the FASB by providing guidance on the implementation of ASC 740 and other accounting pronouncements. True False 6. ASC 740 applies to the accounting for state and local and international income taxes as well as federal income taxes. True False 7. The "current income tax expense or benefit" always represents the taxes paid or refunded in the current year. True False 17-1 Chapter 17 - Accounting for Income Taxes 8. The focus of ASC 740 is the income statement. True False 9. Tax-exempt interest from municipal bonds is an example of a permanent difference. True False 10. The tax effects of permanent differences always show up in a company's computation of its effective tax rate. True False 11. In general, a temporary difference reflects a difference in the financial basis and tax basis of an asset or liability on the balance sheet. True False 12. Temporary differences that are cumulatively "favorable" are defined as taxable temporary differences . True False 13. Brown Corporation reports $100,000 of gain from the sale of land on its income statement. For tax purposes, Brown uses the installment method and reports gain of $10,000. The $90,000 difference in the gain reported is a deductible temporary difference. ... View Full Document

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