Which One of the Following Statements Regarding Operating Losses Is

question 44

Multiple Choice

Which one of the following statements regarding operating losses is false?

• A) The tax benefit of an operating loss carryback is recognized in the period of loss as a current receivable on the balance sheet.
• B) Temporary differences and operating loss carryforwards are accounted for similarly.
• C) The journal entry to recognize an operating loss carryback would include a credit to Income Tax Benefit from Operating Loss Carryback.
• D) The tax benefit of an operating loss carryforward is to be recognized in the period of loss as a current receivable.

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Definitions:

Expensed

Refers to the accounting practice of recognizing a cost as an expense in the income statement in the period it is incurred.

Maintenance

The process of preserving a condition or situation or the process of keeping something in working order by regularly servicing it.

Non-interest-bearing Note

A promissory note or loan agreement that does not accrue interest over time, requiring the borrower to repay only the principal amount.

Present Value

The current worth of a future sum of money or stream of cash flows, discounted at a specified rate of return.