Under the Accrual Method,what Is the Effect of the Current

question 56

Multiple Choice

Under the accrual method,what is the effect of the current year temporary difference in F2015? $$\begin{array} { | l | r | r | } \hline & \text { F2014 } & \text { F2015 } \\\hline \text { Deferred tax liability } & 27,500 & \\\hline \text { Revenue } & & 150,000 \\\hline \text { Taxable income } & & 105,000 \\\hline \text { Tax rate } & 25 \% & 35 \% \\\hline\end{array}$$

• A)11,000
• B)42,500
• C)52,500
• D)63,500

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Definitions:

Preference

A prior or special right or privilege, especially in the context of decision-making or the allocation of resources.

Liquidation

The process of converting assets into cash or other forms of payment to settle debts with creditors during the closure of a business.

Stockholders

Individuals or entities that own shares in a corporation, giving them ownership interests.

Corporation

A legal entity that is separate from its owners, providing limited liability protection, and having the capacity to own assets, incur liabilities, and sell stock.