Intacc2A_Accounting for Income Tax

Profit or income determined after applying the GAAP at a particular time is called

• accounting income

• gross income

• taxable income

• taxable revenues

Profit or income determined after applying the GAAP at a particular time is called

• accounting income

• gross income

• taxable income

• taxable revenues

Profit or income determined after applying the provisions of the National Internal Revenue Code is

• accounting income

• gross income

• taxable income

• taxable revenues

Which of the following shall be classified as permanent difference between pretax financial income and taxable income?

• Payment of premiums of life insurance

• Depreciation expense

• Fines for violation of law

• Product warranty costs

Which of the following shall be classified as permanent difference between pretax financial income and taxable income?

• Payment of premiums of life insurance

• Depreciation expense

• Fines for violation of law

• Product warranty costs

If during the current year, taxable profit us greater than accounting profit and the difference is a temporary difference,

• a deferred tax asset is recognized at the end of the current year

• a deferred tax asset will be recognized in future years

• a deferred tax liability is recognized at the end of the current year

• 
  a deferred tax liability will be recognized in future years

  
  

Which of the following would create deferred tax liability

• Interest revenue on municipal bonds

• Accrual of warranty expense

• Excess of tax depreciation over financial accounting depreciation

• Subscriptions received in advance

Which of the following creates a deferred tax asset?

• tax depreciation exceeding book depreciation

• Using installment sales method for tax purposes and accrual basis for accounting purposes

• Recognition of prepaid expenses

• Recognition of unearned revenues

Which of the following would create a permanent difference between pretax financial income and taxable income?

• Using accelerated depreciation for tax purposes and straight line depreciation for accounting purposes.

• Purchasing equipment previously leased with an operating lease in prior years

• Using the percentage of completion method on long-term construction contracts

• Recording interest revenue on government issued securities

Which of the following would create a deferred tax asset?

Future taxable amount Future deductible amount

• Yes, Yes

• Yes, No

• No, Yes

• No, No