USGAAP and IFRS Require Complex Procedures in Accounting for Income

question 92

Multiple Choice

U.S.GAAP and IFRS require complex procedures in accounting for income taxes.For example, firms provide for estimated warranty cost in the year they sell warranted products but delay the tax deduction until later, when firms make actual expenditures for warranty repairs.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:

Genetically Closed

Describes populations or species with little to no genetic exchange with others, leading to high genetic similarity within the group.

Arbitrary Category

A classification based on random choice or personal whim, rather than any reason or system.

Systematic Program

A structured and planned sequence of procedures or activities designed to achieve specific goals.