Which of the Following Statements Describes the Reasons Why Tax

question 29

Multiple Choice

Which of the following statements describes the reasons why tax adjustments may be required when eliminating the unrealised profit from intragroup sales of inventory?

• A) Tax is paid on a group perspective and therefore one taxable income figure must be derived for the group.
• B) Tax will be adjusted at the request of the Australian Taxation Office.
• C) If tax has been paid by one of the separate legal entities, from the group's perspective this represents a deferral of the payment of tax.
• D) If tax has been paid by one of the separate legal entities, from the group's perspective this represents a pre-payment of tax.
• E) None of the given answers.

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Definitions:

Accounts Receivable

Accounts receivable representing amounts due from customers to a business for delivered but unpaid for goods or services.

Revenue

The sum of money earned from the sales of goods or services that are central to a company's main activities.

Inventory

The raw materials, work-in-progress products, and finished goods that a company holds for the purpose of sale in the near future.

Costs Of Goods Sold

Direct costs attributable to the production of the goods sold by a company, including materials and labor.