What Is One Reason to Use the Taxes Payable Method

question 5

Multiple Choice

What is one reason to use the taxes payable method?

• A)It is a complicated method,but results in the least tax expense.
• B)A company only pays tax once a year under this method.
• C)It results in the best matching for the balance sheet.
• D)It is the least costly method for tax accounting.

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Definitions:

Return on Investments

A metric for assessing how effectively an investment generates returns in comparison to its expense.

Controllable Revenues

Revenues over which a manager or department has influence or direct control, often used in performance evaluation and budgeting.

Residual Income

The net income an entity generates above its cost of capital, a measure of profitability that calculates the surplus after accounting for the cost of capital.

Operating Income

This is the profit realized from a business's operations, after deducting operating expenses such as wages and cost of goods sold but before interest and taxes.