Asked by Alexis Rampey on May 07, 2024
Verified
Which of the following is not a proper description with respect to the financial accounting and reporting of income taxes?
A) A permanent difference does not create a deferred tax asset or liability.
B) An originating temporary difference will eventually create a reversing temporary difference.
C) A net operating loss carryforward does not have any impact on income tax expense for the year the loss occurs.
D) Income tax expense changes during the year that future tax rate increases are enacteD.
Permanent Difference
These are differences between taxable income and accounting income that originate in one period and do not reverse over time, affecting taxable income and tax liability.
Temporary Difference
A discrepancy between the tax base of an asset or liability and its carrying amount on the balance sheet that results in taxable or deductible amounts in future years.
Net Operating Loss Carryforward
This is a tax provision that allows a company to apply a tax year's net operating losses to future years' profits in order to lower tax liabilities.
- Comprehend the distinctions between temporary and permanent variances in tax accounting.
Verified Answer
Learning Objectives
- Comprehend the distinctions between temporary and permanent variances in tax accounting.
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