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Unformatted text preview: or book purposes, but they are not allowable
deductions for tax purposes.
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Becker CPA Review, PassMaster Questions
Lecture: Regulation 3 Choice "a" is incorrect. Cash distributions to shareholders are not reported on the income statement for
book purposes and are not deductible for tax purposes. They do not enter into the calculation of income
in either case and are not reported on the Schedule M-1. Cash distributions actually are reported on
Schedule M-2, which is a reconciliation of unappropriated retained earnings.
Choice "c" is incorrect. Corporate bond interest is not reported differently for GAAP and tax purposes. It
is included as income for GAAP purposes and for tax purposes. Therefore, no reconciliation of book
income to taxable income is required for this item.
Choice "d" is incorrect. The ending balance of retained earnings is not reported on a GAAP income
statement, nor is it included as part of taxable income. Therefore, it is not part of the Schedule M-...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.
- Fall '10
- The Land