In Addition to Recognizing Income Tax Expense, the Accounting Necessary

question 57

Multiple Choice

In addition to recognizing income tax expense, the accounting necessary to record income taxes requires

• A)a credit to income tax payable based on net income times the tax rate.
• B)a debit to the income tax expense account for the amount of cash that must be paid for taxes.
• C)computations of the amounts to record in the deferred income tax account.
• D)all companies to report taxable income on the income statement

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Definitions:

Merchandising Companies

Companies that buy and sell goods without fundamentally changing their condition; they are involved in retail or wholesale.

Merchandising Company

A business that purchases finished goods for resale, earning revenue from the difference between the retail and wholesale prices.

Sales Revenue Section

The sales revenue section of an income statement details the income generated from sales of goods or services before any costs or expenses are deducted.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, highlighting the net profit or loss.