Permanent Differences

question 15

Multiple Choice

Permanent differences:

• A) arise due to differences between income tax legislation and accounting rules, in a particular period, and are reversed in subsequent periods.
• B) are accounted for by creating and/or passing entries through to "Deferred Tax Assets" and "Deferred Tax Liabilities" accounts.
• C) must be considered, and accounted for, by the creation of deferred tax asset and liabilities for all balance sheet items (e.g., including asset revaluations), rather than just income statement items, which is a major change created by the new standard.
• D) arise due to differences between income tax legislation and accounting rules, in a particular period, and are reversed in subsequent periods; are accounted for by creating and/or passing entries through to "Deferred Tax Assets" and "Deferred Tax Liabilities" accounts; must be considered, and accounted for, by the creation of deferred tax asset and liabilities for all balance sheet items (e.g., including asset revaluations), rather than just income statement items, which is a major change created by the new standard
• E) None of the given answers.

Appreciate the significance of closing entries and their effect on the accounts.

Understand how to prepare and interpret financial statements and the work sheet.

Grasp the importance of financial ratios in analyzing a company’s operational efficiency.

Understand the purpose and process of reversing entries in the accounting cycle.

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Definitions:

Strikebreaking

The act of using non-union workers to replace striking employees in order to keep an organization operational during a labor strike.

Productivity

The measure of efficiency in which goods and services are produced, often evaluated by the output per unit of input.