The Effect of an Intragroup Sale of Inventory at a Profit,where

question 37

True/False

The effect of an intragroup sale of inventory at a profit,where the inventory has been sold to external parties prior to the end of the reporting period,is that both profit and the inventory asset are overstated.

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Definitions:

Permanent Differences

Differences between taxable income and accounting income that are not temporary and hence do not reverse over time.

Pretax Financial Income

The total earnings of a company before any taxes have been deducted.

Taxable Income

The amount of an individual's or corporation's income that is subject to income tax, after exemptions, deductions, and allowances are factored in.

Fraudulent Activity

Deliberate deception to secure unfair or unlawful gain, or to deprive a victim of a legal right.