Listed Below Are Five Independent Situations

question 2

Multiple Choice

Listed below are five independent situations. For each situation indicate (by letter) whether it will create (A) a deferred tax asset, (L) a deferred tax liability, or (N) neither.
-Current year charitable contributions not currently deductible due to tax limitations but which can be carried forward to future tax years.

• A)L
• B)N
• C)A

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Definitions:

Constant-Cost Industry

An industry in which the costs of production, including input prices, do not change as the industry's output changes.

Economic Profits

Profits calculated after subtracting both the explicit and implicit costs from total revenues; also known as supernormal profits.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, representing additional earnings beyond the normal profit level.

Industry Entry

The process of a new competitor or company beginning operations in a particular market.