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- The definition of gross income in the tax law is: All items specifically listed as income in the tax law All cash payments received for goods provided and services performed All income from whatever source derived All income from whatever source derived unless the income is earned illegallyWhich of the following is an acceptable method of accounting under the tax law? The accrual method The hybrid method The cash method All of the above are acceptable None of the aboveWhich of the following is not a cause of a difference between pretax financial income and taxable income in a given period? a. operating loss carryforwards b. permanent differences c. applicable tax rates d. temporary differences
- When DTA reverses, income tax payable is reduced, while when DTL reverses, income tax payable is increased. TRUE OR FALSEWhich statement is false?a) Deferred taxes are the product of temporary difference in the recognition ofrevenue and expense for taxable income relative to reported income.b) Deferred taxes arise from the use of the same method of depreciation for tax andreporting purposes.c) Deferred taxes arise when taxes actually paid are less than tax expense reported inthe financial statements.d) Temporary difference causing the recognition of deferred taxes may arise fromthe methods used to account for items such as depreciation, installment sales,leases, and pensions.A temporary difference that would not result in a deferred tax asset but not a permanent difference? a. accrual of commission income. b. excess of financial depreciation over tax depreciation. c. interest revenue on government bonds. d. accrued warranty expense.
- The deferred tax expense is the Select one: a. decrease in balance of deferred tax asset minus the increase in balance of deferred tax liability. b. increase in balance of deferred tax asset plus the increase in balance of deferred tax liability. c. increase in balance of deferred tax asset minus the increase in balance of deferred tax liability. d. increase in balance of deferred tax liability minus the increase in balance of deferred tax asset.A net operating loss occurs when tax-deductible expenses exceed taxable revenues. Tax laws permit the net operating loss to be used to reduce taxable income in future profitable years. How are loss carryforwards recognized for financial reporting purposes?A net operating loss occurs when tax-deductible expenses exceed taxable revenues. Tax laws permit the net operating loss to be used to reduce taxable income in other, profitable years by either a carryback of the loss to prior years or a carryforward of the loss to later years. How are loss carrybacks and loss carryforwards recognized for financial reporting purposes?
- In relation to accounting for income taxes, which one of the following statements is correct? a. Tax expense is the sum of current tax expense plus deferred tax expense. b. All movements in deferred tax assets and liabilities are recognised in the statement of profit or loss and other comprehensive income. c. Current tax expense is the sum of tax expense plus deferred tax expense. d. Deferred tax liabilities are determined from deductible temporary differences.A temporary difference that would not result in a deferred tax asset but not a permanent difference? accrual of commission income. interest revenue on government bonds. excess of financial depreciation over tax depreciation. accrued warranty expense.Title Which of the following is false? (a) Under GAAP, deferred taxes are reported based on the... Description Which of the following is false? (a) Under GAAP, deferred taxes are reported based on the classification of the asset or liability to which it relates. (b) Under IFRS, some potential liabilities are not recognized. (c) Under GAAP, the enacted tax rate is used to measure deferred tax assets and liabilities. (d) Under IFRS, all deferred tax assets and liabilities are classified as non-current.
