ch16 - Chapter 16 - Accounting for Income Taxes Chapter 16...

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Chapter 16 - Accounting for Income Taxes Chapter 16 Accounting for Income Taxes True / False Questions 1. A temporary difference originates in one period and reverses, or turns around, in one or more later periods. True False 2. Expenditures currently deducted in the tax return but not included with expenses in the income statement until subsequent years create deferred tax liabilities. True False 3. A deferred tax asset represents the tax effect of the temporary difference between the financial carrying value of an asset or liability and its tax basis. True False 4. Revenues from installment sales of property reported on financial statements in prior years and currently reported in the tax return create deferred tax assets. True False 5. Future taxable amounts result in deferred tax assets. True False 6. The classification of deferred tax assets is sometimes dependent on when the benefit will be realized. True False 16-1
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Chapter 16 - Accounting for Income Taxes 7. The basic issue in deciding whether to record a valuation allowance for a deferred tax asset is if probable taxable income is anticipated to be insufficient to realize the tax benefit. True False 8. Changes in enacted tax rates that do not become effective in the current period affect deferred tax accounts only after the new rates take effect. True False 9. A net operating loss (NOL) carryforward creates a deferred tax liability that should be classified as current to the extent that the NOL will be recovered in the following year. True False 10. The tax benefit of a net operating loss carried back two years represents a current receivable for income tax to be refunded. True False Matching Questions 11. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the most correct term by placing the letter designating that term in the space provided. discontinued operations, extraordinary items, etc. pro rata basis. 1. Operating loss carryback Will generate a refund of taxes paid in prior years. ____ 2. Valuation allowance Is a process of allocating income tax expense among income from continuing operations, ____ 3. Taxable income Arises when future deductible amounts are created by temporary differences. ____ 4. Deferred tax asset Reduces the net deferred tax asset and is allocated between current and noncurrent on a ____ 5. Intraperiod tax allocation Is the basis for computing the tax liability for taxes currently payable. ____ 16-2
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Chapter 16 - Accounting for Income Taxes 12. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the most correct term by placing the letter designating that term in the space provided. recognizing deferred tax assets and liabilities.
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ch16 - Chapter 16 - Accounting for Income Taxes Chapter 16...

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