Why Might Income Tax Expense on the Income Statement Differ

question 70

Multiple Choice

Why might income tax expense on the income statement differ from actual income taxes paid to the government?

• A) There are timing differences to when income is recognized and there are items that may or may not be subject to taxation.
• B) The IRS uses the accrual method of calculating income.
• C) Financial statement preparers can use an estimated tax rate.
• D) The IRS requires deferral of most expenses.

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Definitions:

Reflexes

Automatic, involuntary responses to external stimuli, present at birth and often used to assess neurological function.

Excitability

The quality of being easily stimulated or responsive to stimuli, often leading to rapid changes in behavior.

Embryonic Period

The stage of prenatal development from fertilization of the egg to the end of the eighth week, where major organs and structures begin to develop.

Teratogens

Environmental agents that can cause birth defects or developmental malformations if exposed to a fetus.