Which of the Following Causes a Permanent Difference Between Taxable

question 22

Multiple Choice

Which of the following causes a permanent difference between taxable income and pretax accounting income?

• A)Advance collections of revenues.
• B)MACRS depreciation method used for equipment.
• C)The installment method used for sales of merchandise.
• D)Interest earned on municipal securities.

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Definitions:

Diminishing Marginal Product

A principle stating that as more of a variable input is added to a fixed input, the additional output produced from each additional unit of the variable input eventually decreases.

Marginal Costs

The supplementary cost arising from the manufacture of an extra unit of a good or service.

Variable Inputs

Inputs that can be adjusted in the short term to alter the level of output in the production process.

Marginal Cost Function

A mathematical representation showing how the cost of producing one additional unit of a good changes as production volume changes.