A Written Promise to Pay a Specified Amount of Money

question 112

Multiple Choice

A written promise to pay a specified amount of money at a particular future date is called a(n) :

• A)unearned revenue.
• B)promissory note.
• C)principal note.
• D)mature note.

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Definitions:

Pre-Tax Book Income

Income of a business before the deduction of tax expenses as reported in the financial statements, not necessarily reflective of taxable income.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Temporary Difference

A discrepancy between the tax basis of an asset or liability and its carrying amount on the balance sheet, which will eventually settle and affect taxable income.

Book Income

A company's income as reported in its financial statements, representing the difference between revenues and expenses.