Explain the Meaning and Significance of Each of the Following $\text { Permanent difference }$

question 19

Essay

Explain the meaning and significance of each of the following terms in accounting for company income tax:
(i)Tax payable method
(ii) Tax Allocation-the balance sheet approach
(iii) Deferred tax asset
(iv) Deferred tax liability
(v)Tax base
(vi) $\text { Permanent difference }$

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Definitions:

Earnings Per Share

A company's profit allocated to each outstanding share of common stock, indicating the company's profitability on a per-share basis.

Receivable Turnover Ratio

A measure of how efficiently a company collects its accounts receivable, calculated by dividing net credit sales by average accounts receivable.

Inventory Turnover Ratio

A metric that calculates the number of times inventory is sold or consumed in a given time frame, reiterating the effciency of inventory management.

Quick Ratio

Quick ratio, also known as acid-test ratio, is a liquidity metric that indicates a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory.