A Characteristic of Franked Dividends That Differentiates Them from Unfranked

question 33

Multiple Choice

A characteristic of franked dividends that differentiates them from unfranked dividends is:

• A)franked dividends carry tax credits related to the income tax paid by the company.
• B)the gross amount of dividends paid is different.
• C)franked dividends are indexed for inflation,while unfranked dividends are not.
• D)the amount of payment received by the shareholder from the company.

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Definitions:

Deferred Tax Liabilities

Future tax payments due to temporary differences between financial accounting and tax accounting practices.

Deferred Tax Assets

Assets on a company's balance sheet that may be used to reduce future tax liability resulting from temporary timing differences between accounting and tax treatments.

Current Tax Liabilities

Taxes owed to the government within the current fiscal year.

Temporary Difference

Refers to the differences that arise between the tax base of an asset or liability and its carrying amount in the financial statements, which will result in taxable or deductible amounts in future years.