An Example of a "Deductible Amount" Occurs When

question 56

Multiple Choice

An example of a "deductible amount" occurs when:

• A)Expenses are recognized more quickly for taxes than for accounting purposes.
• B)Product warranty costs recognized for tax purposes as the warranty conditions are met but recognized for accounting purposes earlier on the accrual basis.
• C)Accelerated depreciation is used for tax purposes but straight-line depreciation is used for accounting purposes.
• D)A gain on instalment sales is recognized for tax purposes as the receivable is collected, but was earlier recognized for accounting purposes when the sale was made.

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Definitions:

Secondary Markets

Markets where securities are bought and sold after their initial issuance, allowing for liquidity and valuation of financial instruments.

Working Capital Financing Policy

Strategies a company uses to manage and finance its current assets and current liabilities to ensure it has sufficient liquidity to run its operations.

Net Working Capital

Current assets minus current liabilities.

Current Ratio

A financial metric that assesses a firm's capacity to meet immediate liabilities using its current assets.