In 2010, Its First Year of Operations, Wichita Falls Company

question 58

Multiple Choice

In 2010, its first year of operations, Wichita Falls Company reported pretax accounting income of $60, 000.Included in the $60, 000 was an expense for accrued, unpaid warranty costs of $8, 000, which are not deductible until paid for income tax purposes.Wichita Falls' income tax rate was 20%.The entry to record the income tax expense would include a

• A)credit to Income Tax Expense for $12, 000
• B)credit to Income Taxes Payable for $12, 000
• C)credit to Deferred Tax Liability for $1, 600
• D)debit to Deferred Tax Asset for $1, 600

Understand the factors that influence aggregate demand and how changes in price levels affect spending on net exports and investment.

Recognize the irregular nature of economic recessions and their impact on consumption and investment spending.

Explain the difference between a shift of the aggregate-demand curve and a movement along a given aggregate-demand curve.

Identify government policies that can shift aggregate demand and understand the role of government spending and taxation.

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Definitions:

Regulatory Requirements

Rules and guidelines imposed by governing bodies that companies must follow to be compliant in their operational, financial, or ethical practices.

Full Goodwill Method

An accounting approach that recognizes the full fair value of goodwill in the acquisition of a subsidiary, not just the portion attributable to the parent company.

Non-controlling Interest

A minority stake in a company, represented by shares that do not grant the shareholder the majority of voting power.

Acquired Goodwill

The excess value paid for a company over the fair value of its identifiable net assets during an acquisition.