A Result of Inter-Period Tax Allocation Is That

question 85

Multiple Choice

A result of inter-period tax allocation is that:

• A) Large fluctuations in a company's tax liability are eliminated.
• B) The income tax expense is allocated among the income statement items that caused the expense.
• C) The income tax expense in the income statement is the sum of the income taxes payable for the year and the changes in deferred tax asset or liability balances for the year.
• D) The income tax expense shown in the income statement is equal to the deferred taxes for the year.

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Definitions:

Partnership

A legal arrangement where two or more persons agree to manage and operate a business and share its profits or losses.

Written Agreement

A formal contract that outlines the terms and conditions of a particular arrangement, documented in writing.

Chain-style Business

A business model where multiple outlets of the same company offer the same product or service, typically under the same brand.

Franchisor

A business entity that grants the right to an individual or group to carry out commercial activities using its trademark and business model in exchange for a fee or royalty.