Which of the Following Differences Between Financial Accounting and Tax

question 110

Multiple Choice

Which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax asset?

• A) Tax depreciation in excess of book depreciation.
• B) Revenue collected in advance.
• C) The installment sales method for tax purposes.
• D) None of these answer choices are correct.

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Definitions:

Rate of Interest

The percentage of the principal charged by the lender for the use of its money.

Compounded Quarterly

Interest calculation method where the interest is added to the principal four times annually, leading to increased growth over time due to the quarterly compounding effect.

Economic Value

The measure of the benefit provided by a good or service to an economic agent.

Bequest

A transfer of personal property or assets to beneficiaries through a will.