All of the Following Can Result in a Temporary Difference

question 63

Multiple Choice

All of the following can result in a temporary difference between pretax financial income and taxable income except

• A) payment of premiums for life insurance.
• B) depreciation expense.
• C) contingent liabilities.
• D) product warranty costs.

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Definitions:

Cash Dividend

A distribution of a company's earnings to its shareholders in the form of cash.

Residual Dividend Approach

A policy whereby dividends are based on earnings minus funds retained to finance the optimal capital budget.

Predictable Dividend Payout

Regular, forecastable payments made by a company to its shareholders, usually as a part of the firm's profit sharing mechanism.

Clientele Effect

The theory that a company’s stock price will move according to the demands and preferences of its investors or clientele regarding dividend policies.