Which of the Following Is an Example of a Temporary

question 34

Multiple Choice

Which of the following is an example of a temporary difference that could result in a deferred tax asset?

• A) Gain on disposal of an asset when included in taxable income before it is included in pretax accounting income
• B) Use of straight-line depreciation for accounting purposes and an accelerated rate for income tax purposes
• C) Gross margin on installment sales is recognized for accounting purposes before it is included in taxable income in the income tax return
• D) Prepayments of expenses in year of payment;recognition of expense for accounting purposes occurs in a later year

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Definitions:

Property

Items, assets, or possessions owned by an individual or entity, including tangible and intangible forms.

Specific Insurance

Insurance policies designed to cover specific risks, objects, or scenarios, offering tailored protection against particular perils.

Collision Insurance

A type of automobile insurance that protects the insured against any loss arising from damage to the insured’s automobile caused by accidental collision with another object or with any part of the roadbed.

Annuity

A guaranteed retirement income.