One of the Problems in Using One Set of Accounting

question 118

Multiple Choice

One of the problems in using one set of accounting records for tax reporting and another set of records for internal management reporting is that:

• A)tax authorities may suspect manipulation of records.
• B)it is almost impossible to keep the records straight and hard to reconcile the books.
• C)it is illegal.
• D)Both A and B are correct.

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Definitions:

Additional Paid-in Capital

The excess amount paid by investors over and above the par value of the shares during the issuance of stock.

Total Assets

The cumulative total of all a company's assets, both current and non-current.

Stockholders' Equity

The portion of the balance sheet that represents the capital received from investors in exchange for stock, plus retained earnings or losses.

Common Stock

Equity security that represents ownership in a corporation, with holders typically having voting rights and potential dividends.