Accounting Test Bank

4528 Words Nov 24th, 2013 19 Pages
Question 36
Taxable income of a corporation
Correct Answer: differs from accounting income due to differences in interperiod allocation and permanent differences between the two methods of income determination.

Question 37 Correct Answer: III

Question 38
Interperiod income tax allocation causes
Correct Answer: tax expense shown on the income statement to equal the amount of income taxes payable for the current year plus or minus the change in the deferred tax asset or liability balances for the year.

Question 39
The deferred tax expense is the
Correct Answer: increase in balance of deferred tax liability minus the increase in balance of deferred tax asset.

Question 40
The rationale for interperiod income tax
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An item that would create a permanent difference in accounting and taxable incomes for Renner would be
Correct Answer: a fine resulting from violations of OSHA regulations.

Question 55
An example of a permanent difference is
Correct Answer: all of these.

Question 56
Which of the following will not result in a temporary difference?
Correct Answer: All of these will result in a temporary difference.

Question 57 Correct Answer: IV

Question 58 Correct Answer: II

Question 59
The use of accelerated depreciation for tax purposes and straight-line depreciation for accounting purposes results in
Correct Answer: a larger amount of depreciation expense shown on the income statement than on the tax return in the last year of the asset's useful life.
Question 60
Which of the following is a permanent difference that is recognized for tax purposes but not for financial reporting purposes?
Correct Answer: The deduction for dividends received from U.S. corporations.

Question 61
When a change in the tax rate is enacted into law, its effect on existing deferred income tax accounts should be
Correct Answer: reported as an adjustment to tax expense in the period of change.

Question 62
Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on the balance sheet if
Correct Answer: the future tax rates have been enacted into law.

Question 63

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