Temporary Differences Arise When Expenses or Losses Are Deducted to Compute

question 28

Multiple Choice

Temporary differences arise when expenses or losses are deducted to compute taxable income $\begin{array}{lll}& \text { Prior to the Time They}& \text { After the Time They Are}\\& \text { Are Deducted to Compute}& \text {Deducted to Compute}\\& \text {Pretax Financial Income}& \text {Pretax Fingncial Income}\\\text { I. } & \text { Yes } & \text { Yes } \\\text { II. } & \text { No } & \text { Yes } \\\text { III. } & \text { Yes } & \text { No } \\\text { IV } & \text { No } & \text { No }\end{array}$

• A)I
• B)II
• C)III
• D)IV

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Definitions:

Net Operating Income

Income from a company's operations, calculated by subtracting operating expenses from operating revenue, excluding income and expenses from non-operating activities.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue, indicating the efficiency of a company in managing its production and labor costs.

Net Operating Income

A company's revenue minus its operating expenses, excluding taxes and interest, providing a measure of profitability from its core business activities.

Variable Costing

An accounting method in which variable production costs are included in product costs, while fixed overhead costs are treated as period expenses.