What Is the Difference Between the Way Taxes Are Treated

question 5

Multiple Choice

What is the difference between the way taxes are treated under the discreet approach and under the integral approach?

• A)Under the discreet approach, taxes are estimated by applying an average tax rate to pre-tax interim net income, but taxes are calculated separately for each interim period under the integral approach.
• B)Under the integral approach, taxes are estimated by applying an average tax rate to pre-tax interim net income, but taxes are calculated separately for each interim period under the discreet approach.
• C)Under the discreet approach, taxes are recognized as they are incurred and paid, but under the integral approach, taxes are estimated by applying an average tax rate to pre-tax interim net income.
• D)Under the integral approach, taxes are recognized as they are incurred and paid, but under the discreet approach, taxes are estimated by applying an average tax rate to pre-tax interim net income.

---

Definitions:

Current Liability

A company's debts or obligations that are due within one year, appearing on the company's balance sheet and including short-term borrowing, accounts payable, and other liabilities.

Revenue

The total amount of money received by a company for goods sold or services provided during a certain time period.

Expense

is an outflow of cash or other valuable assets from a person or company to another entity, representing the cost of operations or services rendered.

Debit Columns

Sections in financial statements where increases in assets or expenses or decreases in liabilities, equity, or income are recorded.