Which of the Following Statements Regarding Schedule M-3 Is False

question 84

Multiple Choice

Which of the following statements regarding Schedule M-3 is false?

• A)The IRS developed Schedule M-3 with the goal of increasing transparency between reported net income for financial accounting purposes and reported net income for tax purposes.
• B)Schedule M-3 reports the temporary versus permanent characterization of book-tax differences.
• C)Part I of Schedule M-3 reconciles worldwide financial statement net income to the financial statement net income of those corporations permitted to be included in the U.S.consolidated tax return group.
• D)Schedule M-3 replaces Schedule M-1 for all tax years beginning after December 31,2004.

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Definitions:

Incremental Analysis

The method of evaluating the financial impact of business decisions by considering only the costs and benefits that change due to the decision.

Differential Analysis

The process of comparing the costs and benefits of alternative decisions.

Cost Behaviors

The way in which costs change in relation to the level of activity or production volume.

Variable Costs

Costs that change in proportion to the level of activity or volume, such as materials and labor directly associated with the production.