Chapter 19 Quiz

Chapter 19 Quiz - 1 Exercise Permanent and temporary...

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1.  Exercise - Permanent and temporary differences.Listed below are items that are treated differently for  accounting purposes than they are for tax purposes. For each item, indicate whether it creates a:(a) Permanent  difference(b) Temporary difference, deferred tax asset(c) Temporary difference, deferred tax liability A. Permanent difference B. Temporary difference, deferred tax asset C. Temporary difference, deferred tax liability Advance rental receipts. Fine for polluting. Estimated future warranty costs. Excess of contributions over pension expense. Expenses incurred in obtaining tax-exempt revenue. Installment sales. Excess tax depreciation over accounting depreciation. Long-term construction contracts. Premiums paid on life insurance of officers (company is the beneficiary). Points  7.0/9.0 
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Earned:  Correct  Answer(s): Temporary difference, deferred tax asset : Advance rental receipts., Permanent difference : Fine  for polluting., Temporary difference, deferred tax asset : Estimated future warranty costs.,  Temporary difference, deferred tax liability : Excess of contributions over pension expense.,  Permanent difference : Expenses incurred in obtaining tax-exempt revenue., Temporary  difference, deferred tax liability : Installment sales., Temporary difference, deferred tax liability :  Excess tax depreciation over accounting depreciation., Temporary difference, deferred tax  liability : Long-term construction contracts., Permanent difference : Premiums paid on life  insurance of officers (company is the beneficiary). 2.  A major distinction between temporary and permanent differences is A) permanent differences are not representative of acceptable accounting practice. B) temporary differences occur frequently, whereas permanent differences occur only once. C) once an item is determined to be a temporary difference, it maintains that status; however, a permanent 
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Chapter 19 Quiz - 1 Exercise Permanent and temporary...

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