Which one of the following is a permanent difference between book and taxable income?

A) Interest received on municipal bonds
B) Installment sales
C) Bad debts expense
D) Warranty expense

Municipal Bonds

Debt securities issued by municipalities or local governments to finance public projects, typically offering tax-exempt interest payments to investors.

Permanent Difference

Refers to the discrepancy between book income and tax income that arises from certain items being recognized in either financial accounting or tax accounting, but not in both, leading to a difference that does not reverse over time.