Which of the Following Items Is Subtracted from Book Income

question 78

Multiple Choice

Which of the following items is subtracted from book income to arrive at taxable income?

• A)Federal income tax expense on the income statement.
• B)Book depreciation that is in excess of tax depreciation.
• C)Life insurance proceeds.
• D)Final month rent collected at lease signing.

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Definitions:

Average Cost

A method for inventory and cost of goods sold valuation, calculated by dividing the total cost by the number of items.

LIFO Method

Last In, First Out method; an inventory valuation technique where the most recently produced items are recorded as sold first.

Prospective Treatment

An approach in accounting where changes are applied to transactions and events from a specific date forward.

Reporting Entity

An entity, such as a company or organization, that must prepare financial statements to provide information to users.