ACCOUNTING FOR INCOME TAXES EXAM WITH ANS 2024
LATEST VERSION
1. What is the difference between taxable income and accounting income?
Answer: Taxable income is the amount of income that is subject to tax under
the tax laws, while accounting income is the amount of income that is
reported in the financial statements in accordance with accounting
principles.
2. What is deferred tax liability? Answer: Deferred tax liability is a liability
that represents the future tax consequences of temporary differences between
the tax basis and the book basis of assets and liabilities.
3. What is deferred tax asset? Answer: Deferred tax asset is an asset that
represents the future tax benefits of temporary differences between the tax
basis and the book basis of assets and liabilities.
4. What is the difference between permanent and temporary differences in tax
accounting? Answer: Permanent differences are differences between taxable
income and accounting income that will never reverse and have no future tax
consequences. Temporary differences are differences between taxable
income and accounting income that will reverse in the future and have future
tax consequences.
5. How are deferred tax assets and liabilities calculated? Answer: Deferred tax
assets and liabilities are calculated using the tax rates that are expected to
apply in the future, and are adjusted for changes in tax rates that are enacted
into law.
LATEST VERSION
1. What is the difference between taxable income and accounting income?
Answer: Taxable income is the amount of income that is subject to tax under
the tax laws, while accounting income is the amount of income that is
reported in the financial statements in accordance with accounting
principles.
2. What is deferred tax liability? Answer: Deferred tax liability is a liability
that represents the future tax consequences of temporary differences between
the tax basis and the book basis of assets and liabilities.
3. What is deferred tax asset? Answer: Deferred tax asset is an asset that
represents the future tax benefits of temporary differences between the tax
basis and the book basis of assets and liabilities.
4. What is the difference between permanent and temporary differences in tax
accounting? Answer: Permanent differences are differences between taxable
income and accounting income that will never reverse and have no future tax
consequences. Temporary differences are differences between taxable
income and accounting income that will reverse in the future and have future
tax consequences.
5. How are deferred tax assets and liabilities calculated? Answer: Deferred tax
assets and liabilities are calculated using the tax rates that are expected to
apply in the future, and are adjusted for changes in tax rates that are enacted
into law.
