Question :
71. Temporary differences between pretax book income and taxable income arises : 1245714
71. Temporary differences between pretax book income and taxable income arises from
A. tax-exempt interest revenue, only.
B. certain fines, only.
C. depreciation on long-lived assets, only.
D. bad debt expense, only.
E. depreciation on long-lived assets and bad debt expense.
72. Firms compute income tax payable for a period using _____ as the base.
A. book income
B. total income
C. permanent income
D. taxable income
E. gross income
73. Taxable income excludes _____ and uses the accounting methods that the _____ either require or permit firms to use for tax reporting.
A. temporary differences; income tax law and regulations
B. permanent differences; income tax law and regulations
C. temporary differences; U.S. GAAP or IFRS
D. permanent differences; U.S. GAAP or IFRS
E. temporary and permanent differences; U.S. GAAP or IFRS
74. Which of the following is/are true regarding U.S. GAAP and IFRS requirements for income tax accounting for financial reporting purposes?
A. A permanent difference never affects income tax expense for any period.
B. A temporary difference that implies a future tax deduction gives rise to a deferred tax asset.
C. A temporary difference that implies a future increase in income tax payable gives rise to a deferred tax liability.
D. The accountant computes income tax expense using pretax amounts for financial reporting.
E. all of the above
75. Which of the following is/are not true regarding U.S. GAAP and IFRS requirements for income tax accounting for financial reporting purposes?
A. Income taxes expense equals income taxes currently payable.
B. A temporary difference that implies a future tax deduction gives rise to a deferred tax asset.
C. A temporary difference that implies a future increase in income tax payable gives rise to a deferred tax liability.
D. The accountant computes income tax expense using pretax amounts for financial reporting.
E. A permanent difference never affects income tax expense for any period.
76. The basis for both U.S. GAAP and IFRS requirements for income tax accounting for financial reporting purposes focuses on which of the following financial reporting objectives?
A. recognizing the amount of taxes payable in the current year, only.
B. recognizing deferred tax assets and deferred tax liabilities for the future income tax consequences of temporary differences, only.
C. recognizing the amount of taxes payable in the current year, and recognizing deferred tax assets and deferred tax liabilities for the future income tax consequences of temporary differences.
D. recognizing deferred tax assets and deferred tax liabilities for the future income tax consequences of permanent differences, only.
E. recognizing the amount of taxes payable in the current year, and recognizing deferred tax assets and deferred tax liabilities for the future income tax consequences of permanent differences.
77. Using U.S. GAAP and IFRS requirements for income tax accounting for financial reporting purposes, permanent differences
A. reverse, affect cash outflows for income taxes, and therefore affect income tax expense.
B. reverse, affect cash outflows for income taxes, and therefore never affect income tax expense for any period.
C. reverse, never affect cash outflows for income taxes, and therefore never affect income tax expense for any period.
D. never reverse, affect cash outflows for income taxes, and therefore never affect income tax expense for any period.
E. never reverse, never affect cash outflows for income taxes, and therefore never affect income tax expense for any period.
78. Using U.S. GAAP and IFRS requirements for income tax accounting for financial reporting purposes, the accountant computes income tax expense using
A. pretax amounts for financial reporting.
B. the amounts on income tax returns.
C. the cash outflows for income taxes.
D. permanent differences.
E. temporary and permanent differences.
79. The temporary difference associated with accelerated depreciation for tax purposes and straight-line depreciation for financial reporting purposes means that a firm will pay _____ income taxes in the early years of the asset’s life, but this temporary difference will reverse over the entire asset life, resulting in _____ taxes in later years.
A. higher; higher
B. lower; higher
C. higher; lower
D. lower; lower
E. average; average
80. U.S. GAAP and IFRS require complex procedures in accounting for income taxes. Complexities in the accounting for income taxes include(s)
A. income tax rates change over time, so the deferred tax liability need not represent the amount of taxes that the firm must pay later.
B. some temporary differences create deferred tax assets.
C. some temporary differences create deferred tax liabilities.
D. firms recognize deferred tax assets only to the extent that they expect to generate sufficient taxable income to realize the assets in the form of tax savings in the future.
E. all of the above
