USGAAP and IFRS Require Complex Procedures in Accounting for Income

question 95

Multiple Choice

U.S.GAAP and IFRS require complex procedures in accounting for income taxes.For example, firms provide for estimated uncollectible accounts when they recognize sales on account but delay the tax deduction until later, when firms judge that particular customers' accounts are uncollectible.In this example, a

• A)deferred tax asset arises.
• B)deferred tax liability arises.
• C)firm recognizes a revenue earlier for financial reporting than for tax reporting.
• D)firm recognizes a revenue earlier for tax reporting than for financial reporting.
• E)firm recognizes an expense earlier for tax reporting than for financial reporting.

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Definitions:

Psychological Pricing

Encouraging purchases based on emotional rather than rational responses to the price.

Seasonal Discount Pricing

A pricing strategy where companies offer discounts on their products or services during certain times of the year.