Which of the Following Items Is Not a Reconciling Item

question 33

Multiple Choice

Which of the following items is not a reconciling item in the income tax footnote?

• A) Compensation deduction related to incentive stock options
• B) Compensation deduction related to nonqualified stock options that were expensed for financial accounting purposes
• C) Domestic production activities deduction
• D)State and local income taxes

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Definitions:

Direct Method

A way of presenting the cash flow statement where major categories of gross cash receipts and cash payments are disclosed.

Cost of Goods Sold

The total cost of all materials, labor, and overhead used to produce goods sold by a business during an accounting period.

Merchandise Inventory

Goods that a company holds for the purpose of selling them to customers, often a significant current asset on the balance sheet.

Accounts Payable

Liabilities of a business that represent money owed to creditors for goods and services purchased on credit.