Practice Exam #2 %286332%29 - Practice Exam #2 AIM 6332...

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Unformatted text preview: Practice Exam #2 AIM 6332 Spring 2011 1. Which of the following causes a temporary difference between taxable and pretax accounting income? A. Investment expenses incurred to generate tax-exempt income. B. MACRS used for depreciating equipment. C. The dividends received deduction. D. Life insurance proceeds received due to the death of an executive. AACSB: Reflective thinking Bloom's: Knowledge Learning Objective: 16-01 Describe the types of temporary differences that cause deferred tax liabilities and determine the amounts needed to record periodic income taxes. Level of Learning: Easy 2. Which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax liability? A. Interest income on municipal bonds. B. Proceeds from life insurance received due to death of an executive. C. Prepaid rent. D. None of the above. AACSB: Reflective thinking Bloom's: Comprehension Learning Objective: 16-01 Describe the types of temporary differences that cause deferred tax liabilities and determine the amounts needed to record periodic income taxes. Level of Learning: Medium 3. A result of interperiod tax allocation is that: A. Large fluctuations in a company's tax liability are eliminated. B. The income tax expense is allocated among the income statement items that caused the expense. C. The income tax expense in the income statement is the sum of the income taxes payable for the year and the changes in deferred tax asset or liability balances for the year. D. The income tax expense shown in the income statement is equal to the deferred taxes for the year. AACSB: Reflective thinking Bloom's: Comprehension Learning Objective: 16-01 Describe the types of temporary differences that cause deferred tax liabilities and determine the amounts needed to record periodic income taxes. Level of Learning: Medium 4. Which of the following usually results in an increase in a deferred tax liability? A. Accrual of estimated operating expenses. B. Revenue collected in advance. C. Prepaid operating expenses. D. All of the above are correct. AACSB: Reflective thinking Bloom's: Comprehension Learning Objective: 16-01 Describe the types of temporary differences that cause deferred tax liabilities and determine the amounts needed to record periodic income taxes. Level of Learning: Medium 5 . Which of the following circumstances creates a future taxable amount? A. Service fees collected in advance from customers: taxable when received, recognized for financial reporting when earned. B. Accrued compensation costs for future payments. C. Straight-line depreciation for financial reporting and accelerated depreciation for tax reporting. D. Investment expenses incurred to obtain tax-exempt income (not tax deductible)....
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This note was uploaded on 06/16/2011 for the course ACCT 6325 taught by Professor Charles during the Spring '11 term at University of Texas at Dallas, Richardson.

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Practice Exam #2 %286332%29 - Practice Exam #2 AIM 6332...

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