Which of the Following Factors May Cause a Difference Between

question 4

Multiple Choice

Which of the following factors may cause a difference between book income and taxable income?

• A) The company uses straight-line depreciation for books and accelerated depreciation for tax.
• B) The company pays its federal income taxes quarterly as opposed to annually.
• C) The company sells stock right before the end of the year.
• D) The company has a deposit in transit at year-end.

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Definitions:

GICs

Guaranteed Investment Certificates are financial products in Canada offering an assured interest rate over an agreed-upon term.

Simple Interest

The interest calculated only on the principal amount, without the accumulation of prior interest.

Simple Interest

Interest figured only on the principal balance, or on the portion of the principal balance that is still due.

Closing Balance

The amount of money in an account at the end of a period, after all transactions have been accounted for.