Which of the Following Approaches to Interperiod Tax Allocation Best

question 9

Multiple Choice

Which of the following approaches to interperiod tax allocation best represents an example of the matching principle?

• A) The deferred method of interperiod income tax allocation
• B) Discounting deferred income taxes
• C) Nonallocation of income taxes
• D) The asset/liability method of income tax allocation.

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Definitions:

Ordinary Annuity

A series of equal payments made at regular intervals, with interest compounding at the end of each period.

Deferred Annuity

A financial product offered by insurance companies that postpones the disbursement of income, periodic payments, or a single large payment until chosen by the investor.

Ordinary Annuity

An investment product that pays out fixed payments to an individual at regular intervals for a specified period of time, typically used for retirement savings.

Deferred Annuity

A type of annuity contract that delays payments of income, installments, or a lump sum until the investor elects to receive them.