Which of the Following Is Not a Proper Description with Respect

question 54

Multiple Choice

Which of the following is not a proper description with respect to the financial accounting and reporting of income taxes?

• A)A permanent difference does not create a deferred tax asset or liability.
• B)An originating temporary difference will eventually create a reversing temporary difference.
• C)A net operating loss carryforward does not have any impact on income tax expense for the year the loss occurs.
• D)Income tax expense changes during the year that future tax rate increases are enacteD.

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Definitions:

Quick Assets

Assets that can be quickly converted into cash within 90 days or less, such as cash, marketable securities, and accounts receivable.

Marketable Securities

Financial instruments that can be easily converted into cash, such as stocks and bonds, typically held for short-term investment purposes.

Long-term Investments

Long-term investments are assets that a company intends to hold for more than one year, such as stocks, bonds, or real estate.

Current Ratio

This ratio assesses an entity's potential to cover its short-term dues using resources that are expected to be liquidated within a year.