Which Statement Is Correct

question 76

Multiple Choice

Which statement is correct?

• A)Financial reporting rules are generally consistent with tax reporting rules.
• B)Tax rules are generally consistent the principles used in accrual accounting.
• C)Tax rules generally require a higher degree of reliability than financial reporting.
• D)Accounting income is generally similar to taxable income.

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Definitions:

Consolidation

The process of combining financial statements of a parent company with its subsidiaries to present as if the group of companies is a single economic entity.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for a long-term asset since its acquisition.

Consolidation Purposes

The process of combining the financial statements of a parent company and its subsidiaries into one comprehensive financial statement package, to present as if the group were a single entity.

Excess Amortizations

The amount by which amortization expense exceeds the amount necessary to amortize the cost of a tangible or intangible asset over its useful life.