Huml Inc Could Not Deduct an Accrued Expense Because of the the All-Events

question 105

True/False

Huml Inc. could not deduct an accrued expense because of the all-events test. As a result, Huml has a permanent unfavorable book/tax difference.

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Definitions:

Dividends Declared

Profits distributed by a company to its shareholders out of its earnings, based on the number of shares owned.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to shareholders, often reinvested in the business or kept as a reserve.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor costs, but excluding indirect expenses.