acct 253 ch 19

  1. Income tax payable is based (computed) on



    D. taxable income
  2. Taxable amounts are temporary differences that



    C. require the recording of a deferred tax liability
  3. Which of the following statements related to a deferred tax liability is incorrect?



    A. it is a future obligation
  4. Future deductible amounts will cause



    D. the recording of a deferred tax asset
  5. a deferred tax valuation allowance account is used to recognize a reduction in



    B. a deferred tax asset only
  6. Income tax expense is computed as income tax payable



    C. plus or minus the change in deferred income taxes
  7. All of the following are examples of temporary differences that result in taxable amounts in future years except



    D. subscriptions received in advance
  8. Which of the following is not a permanent difference?



    D. litigation accruals
  9. Deferred income taxes are based on the



    C. future tax rates if they have been enacted into law
  10. A net operating loss



    C. may be carried back 2 years or carried forward up to 20 years
  11. Which of the following statements related to loss carrybacks and carryforwards is correct?



    • B. the benefit due to a loss caryfoward can be reported in both the loss
    • year and future years
  12. Deferred income taxes are usually classified as



    • A. current or noncurrent based on the classification of the related
    • asset (liability) for financial reporting purposes
  13. Income tax expense should be accepted to all of the following except



    B. unusual or infrequent items
  14. All of the following are possible sources of taxable income available to realize a tax benefit for deductible temporary differences except



    D. future reversals of existing deductible temporary differences
  15. The last procedure (step) in the computation of deferred income taxes is to



    A. reduce deferred tax assets by a valuation allowance if necessary
  16. Pretax financial income is determined according to the Internal Revenue Code.
    False
  17. A deferred tax liability represents the increase in taxes payable in future years as a result of a taxable temporary differences
    True
  18. Permant diferrences reslt in deferred tax consequences
    False
  19. A loss carryback may be foregone and used as a loss carryforward for up to 20 years.
    True
  20. The valuation allowance account shoud be evaluated at the end of each accounting period
    True
  21. Proceeds from life insurance carried by the company on key officers or employees is an example of a temporary difference.
    False
  22. A deferred tax asset is the deferred tax consequence attributable to deductible temporary differences
    True
  23. A deferred tax liability is the deferred tax consequence attributable to taxable temporary differences
    true
  24. Taxable temporary differences give rise to recording deferred tax assets
    false
  25. Subscriptions received in advance will result in taxable amounts in the future years.
    false - results in tax deductible amount or tax asset to be added to pretax financial income in future years
  26. Income tax expense is based on



    A. pretax income
  27. Deferred tax expense is the



    A. increase in a deferred tax liability
  28. A deferred tax liability represents the:



    C. increase in taxes payable in future years as a result of taxable tempory differences
  29. A deferred tax asset represents the:



    D. increase in taxes saved in future years as a result of deductible temporary differences
  30. A valuation account is used to:



    D. reduce a deferred tax asset
  31. All of the following are examples of temporary differences that result in tax deductions in future years except:



    D. depreciable property
  32. Which of the following is not an example of a temporary difference that will result in a deductible amount in future years?



    B. installment sales
  33. Which of the following is a permanent difference?



    D. interest received on state and municipal obligations
  34. In computing deferred income taxes for which graduated tax rates are a significant factor, companies are required to use the:



    A. average rates
  35. The FASB believes that the most consistant method for accounting for income taxes in the:



    B. asset liability method
  36. Taxable income of a corporations



    • C. differs from accounting income due to differences in intraperiod
    • allocaction and permanent differences between the 2 mthods of income
    • determination
  37. Taxable income of a corporation differs from pretax financial income because of
    Permanent differences/temporary differences



    D. yes/yes
  38. Interperiod income tax allocation causes



    • B. tax expense shown on the income statement to equal the amount of
    • income taxes payable for the current year plus or minus the change in
    • the diferred tax asset or liability balances for the year
  39. The deferred tax expense is the



    D. increase in balance of deferred tax liability minus the increase in balance of deferred tax asset
  40. The rationale for interperiod income tax allocation is to



    A. recognize a tax asset or liability for the tax consequences of temporary differences that exist at the balance sheet date
  41. Interperiod tax allocation results in a deferred tax liability from



    A. an income item fully recognized for tax and financial purposes in any one year
  42. Interperiod tax allocation results in a deferred tax liability from



    B. an income item fully recognized for tax and financial purposes in any one year
  43. Interperiod income tax allocation procedures are appropriate when



    • D. differences between net income for tax purposes and financial
    • reporting occur because even though financial accounting principles and
    • tax laws concur on the item to be recognized as revenues and expenses,
    • they don't concur on the timing of the recognition
  44. A temporary difference arises when a revenue item is reported for tax purposes in a period
    after reported in financial/before reported in finacial



    D. yes/yes
  45. Assuming a 40% statutory tax rate applies to all years involved, which of the following situations will give rise to reporting a deferred tax liability on the balance sheet?
    I. A revenue is deferred for financial reporting purposes but not for tax purposes
    II A revenue is deferred for tax purposes but not for financial reporting purposes
    III. An expense is deferred for financial reporting purposes but not for tax purposes
    IV. An expense is deferred for tax purposes but not for financial reporting purposes



    B. items II and III only
  46. A major distincition between temporary and permanent differences is



    B. temporary differences reverse themselves in subsequent accounting periods, whereas permanent differences do not reverse
  47. Which of the following is a temporary difference classified as a revenue or gain that is taxable after it is recognized in financial income?



    • D. an installment sale accounted for on the accural basis for financial
    • reporting purposes and on the installment (cash) basis for tax purposes

    a & b are taxable before recognizned as financial income and d is a permanent difference
  48. Renner Corporation's taxable income differed from its accounting income computed for this past year. An item that would create a permanent difference in accounting and taxable income for Renner would be



    D. a find resulting from violations of OSHA regulations
  49. An example of a permant difference is



    A. all of these
  50. Which of the following will not result in a temporary difference?



    D. all of these will result in a temporary difference
  51. When a change in the tax rate is enacted into law, its effect on existing deferred income tax accounts should be



    B. reported as an adjustment to tax expense in the period of change
  52. Recognition of tax benefits in the loss year due to a loss carry forward requires



    B. the establishment of a deferred tax asset
  53. Deferred taxes should be presented on the balance sheet



    D. in 2 amounts: one for the net current amount and one for the net noncurrent amount
  54. Deferred tax amounts that are related to specific assets or liabilities should be classified as current or noncurrent based on



    A. the classification of the related asset or liability
  55. Tanner, Inc, incurred a financial and taxable loss for 2007.; Tanner therefore decided to use the carryback provisions as it had been profitable up to this year. How should the amounts related to the carryback be reported in the 2007 financial statements?



    C. the refund claimed should be shown as a reduction of the loss in 2007.
Author
wsrdpc
ID
27573
Card Set
acct 253 ch 19
Description
acct 253 ch 19
Updated