Aging Schedules Are Flawed Because They

question 36

Multiple Choice

Aging schedules are flawed because they:

• A) do not identify specific customers.
• B) show the percent of accounts that are past due.
• C) only give the yearly or periodic average of account age.
• D) All of these.
• E) None of these.

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Definitions:

Temporary Differences

The differences between the accounting income and taxable income that are not permanent and will reverse in future periods.

Permanent Differences

These are variations between taxable income and accounting income that originate from certain items being recognized in one manner for tax purposes and another for financial reporting purposes and do not reverse over time.

Pretax Financial Accounting

The process of preparing financial statements that calculate revenues, expenses, and earnings before taxes are deducted.

Taxable Income

The portion of income that is subject to income tax after adjustments, deductions, and exemptions are applied.