chapter 19

chapter 19 - Multiple Choice, Question 22 Correct. Taxable...

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Unformatted text preview: Multiple Choice, Question 22 Correct. Taxable income of a corporation differs from pretax financial income because of Permanent Differences Temporary Differences Yes Yes Yes No No Yes No No Correct Multiple Choice, Question 24 Machinery was acquired at the beginning of the year. Depreciation recorded during the life of the machinery could result in Future Taxable Amounts Future Deductible Amounts No No Yes Yes Yes No No Yes Correct Multiple Choice, Question 25 A temporary difference arises when a revenue item is reported for tax purposes in a period After it is reported in financial income Before it is reported in financial income Yes No No No No Yes Yes Yes Multiple Choice, Question 27 Correct. Assuming a 40% statutory tax rate applies to all years involved, which of the following situations will give rise to reporting a deferred tax liability on the balance sheet? I. A revenue is deferred for financial reporting purposes but not for tax purposes. II. A revenue is deferred for tax purposes but not for financial reporting purposes. III. An expense is deferred for financial reporting purposes but not for tax purposes. IV. An expense is deferred for tax purposes but not for financial reporting purposes. items I and IV only items I and II only item II only items II and III only Multiple Choice, Question 29 Correct. Which of the following are temporary differences that are normally classified as expenses or losses that are deductible after they are recognized in financial income? Fines and expenses resulting from a violation of law. Advance rental receipts. Product warranty liabilities. Depreciable property. Correct Multiple Choice, Question 32 Stuart Corporation's taxable income differed from its accounting income computed for this past year. An item that would create a permanent difference in accounting and taxable incomes for Stuart would be using accelerated depreciation for tax purposes and straight-line depreciation for book purposes. a fine resulting from violations of OSHA regulations. making installment sales during the year. a balance in the Unearned Rent account at year end Correct Multiple Choice, Question 35 A company uses the equity method to account for an investment. This would result in what type of difference and in what type of deferred income tax? Type of Difference Deferred Tax Permanent Liability Temporary Liability Temporary Asset Permanent Asset Correct Multiple Choice, Question 37 Which of the following temporary differences results in a deferred tax asset in the year the temporary difference originates? I. Accrual for product warranty liability. II. Subscriptions received in advance. Subscriptions received in advance....
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chapter 19 - Multiple Choice, Question 22 Correct. Taxable...

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