Unformatted text preview: cash basis is used. An example of a temporary difference is future pretax financial income; this causes taxable income to be less than pretax financial income when calculating future deductable amounts. These differences exist because the tax is being deferred to future years. These differences exist to more accurately assess a company’s financial position. The affect on financial statements is that income will either be overstated or understated, hence not correctly reflecting tax liability....
View Full Document
- Spring '09
- Financial Accounting, FINANCIAL INCOME