Permanent Differences Between Pretax Financial Income and Taxable Income Result

question 10

Multiple Choice

Permanent differences between pretax financial income and taxable income result when

• A)a company engages in fraudulent activity
• B)the SEC imposes a penalty on a company
• C)the IRS imposes interest on a late payment
• D)the FTC changes how an advertisement can be shown on TV even though the company has paid for the ad

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Definitions:

Statement Of Owner's Equity

A financial statement that shows the changes in the equity of a company over a specific period, including contributions, withdrawals, and the company’s net income or loss.

Net Income

The amount of profit left after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from total revenues.

Additional Investment

Funds invested into a business by its owners or shareholders over and above the initial investment.

Income Statement

A financial statement that reports a company's revenues, expenses, and profits over a specific period, showing the financial performance of the business.