Asked by Lauren Stacy on Jun 17, 2024
Verified
Which of the following statements is not correct?
A) Temporary differences causing taxable income in future periods to be higher than book income in future periods create deferred tax liabilities.
B) Temporary differences causing taxable income in future periods to be lower than book income in future periods create deferred tax assets.
C) A permanent difference results when a revenue enters into the determination of book income in one period but affects taxable income in a different period.
D) A temporary difference causing book income to be less than taxable income when initially recorded is described as an originating difference.
Temporary Differences
Differences between the carrying amount of an asset or liability in the balance sheet and its tax base that will result in taxable or deductible amounts in future periods.
Deferred Tax Liabilities
Future tax obligations that arise due to temporary differences between the book value and tax value of assets and liabilities.
Deferred Tax Assets
Financial items on the balance sheet representing taxes paid or carried forward but not yet realized on the income statement.
- Clarify the separation between temporary and permanent tax differences and their influence on taxable income.
Verified Answer
Learning Objectives
- Clarify the separation between temporary and permanent tax differences and their influence on taxable income.
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