Which of the Following Arguments Is Supportive of Allocation of Income

question 65

Multiple Choice

Which of the following arguments is supportive of allocation of income taxes?

• A) Future predictions of net income are enhanced when income taxes are allocated.
• B) Income tax expense computed under interperiod tax allocation is a better predictor of future cash flows than income taxes actually paid.
• C) Income tax is not an expense;it is a sharing of profits with government.
• D) Income tax expense based on actual payments is more understandable to users than allocated income taxes.

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Definitions:

Tangible Assets

Physical and material assets, such as machinery, buildings, and land, that have a value and can be seen and touched.

Comparable Business

A company or business model similar in size, scope, or industry to another, used for benchmarking or competitive analysis.

Expense Ratios

A measure of what an investment fund charges its shareholders for portfolio management, expressed as a percentage of the fund's assets.

Absolute Measures

Statistical tools used to assess the total magnitude of an entity or phenomenon without comparison to other entities or phenomena.