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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Which of the following is not a cause of a difference between pretax financial income and taxable income in a given period?

  1. a. operating loss carryforwards
  2. b. permanent differences
  3. c. applicable tax rates
  4. d. temporary differences

To determine

Identify from the following that is not a cause of difference between pre-tax financial income and taxable income.

Explanation

Taxable Income: The amount of adjusted gross income that is liable to be taxed is known as taxable income.

Explanation for the given options:

a. Operating loss carry forwards cause the difference between pre-tax financial income and taxable income. Thus, this option is the incorrect answer.

b. Permanent differences cause the difference between pre-tax financial income and taxable income.  Thus, this option is the incorrect answer.

c. The income tax payable is calculated using the Applicable tax rates for the current period...

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