B can either decrease or increase net income c has no

B) can either decrease or increase net income.
C) has no effect on net income.
D) increases net income.
2. A corporation that incurs a net operating loss must carry the loss back to earlier years
before it can carry the loss forward.
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3.
Financial statement disclosures concerning income taxes provides financial analysts
with information regarding the transactions that had an impact on the year-end deferred
income taxes balance.
4.
GAAP requires a disclosure that reconciles a company’s effective income tax rate and
the U.S. statutory income tax rate.
5.
The income tax benefit associated with a loss carryback or carryforward is recorded as
an adjustment to income tax expense in the year of the loss.
6.
Income tax expense when interperiod tax allocation is used creates a more stable
effective tax rate over time relative to using tax payments as income tax expense.
7.
Once a deferred tax asset valuation allowance is established, it can be either increased
or decreased in future years.
8.
A significant decrease in the deferred tax asset account is relevant with respect to
assessing earnings quality.
9. Smith Company reported $350,000 in book income before
income tax during 2018, its first year of operation. The tax
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depreciation exceeded its book depreciation by $30,000. The tax
rate for 2018 and all future years was 40%. If Smith paid no
estimated taxes, what amount of income tax payable should
Smith report in its December 31, 2018, balance sheet?
If Smith paid no estimated taxes, what amount of income tax
payable should Smith report in its December 31, 2018, balance
sheet?
A. $140,000
B. $100,000
C. $128,000
D. $120,000
10. Smith Company reported $350,000 in book income before
income tax during 2018, its first year of operation. The tax
depreciation exceeded its book depreciation by $30,000. The tax
rate for 2018 and all future years was 40%.
Income tax expense reported in the income statement for the year
ending December 31, 2018 would be:
A. $120,000.
B. $128,000.
C. $100,000.
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D. $140,000.
11.
Smith Company reported $350,000 in book income before
income tax during 2018, its first year of operation. The tax
depreciation exceeded its book depreciation by $30,000. The tax
rate for 2018 and all future years was 40%.
What amount of deferred tax liability should Smith report in its
December 31, 2018, balance sheet?
A. $ 12,000
B. $ 9,000
C. $ 8,000
D. $ 10,000
12.
Statutory depletion in excess of cost depletion is an example of a
permanent difference.
13. Stone Company reported pre-tax book
income of $700,000 in 2018, the first year
of operation. The tax depreciation exceeded
the book depreciation by $90,000. The tax
rate for 2018 and all future years was 30%.