In: Accounting
Part 1: Match the term with the appropriate income taxes related definition.
Term Definition
Timing difference: _______ A. Taxable income higher than pretax financial income—in the future
Taxable income: _______ B. Organization responsible for the Internal Revenue Code
FASB: _______ C. Amount that reduces income taxes payable
Deduction: _______ D. Reported U.S. GAAP revenues or expenses are not the same amounts as reported tax income or tax deductions
IRS: _______ E. Taxable income lower than pretax financial income—in the future
Future taxable amounts: _______ F. Amount that increases income tax payable
Future deductible amounts: _______ G. Organization responsible for U.S. GAAP
Part 2: Match the term with the appropriate income taxes related definition.
Term Definition
Deferred tax asset: _______ A. A contra-asset that reduces a deferred tax asset
Deferred tax liability: _______ B. Book-tax differences that reverse in future years
Valuation allowance account: _______ C. An Internal Revenue Code benefit that allows taxpayers to spread-out their losses to prior and/or future years
Permanent difference: _______ D. A future tax benefit that indicates future taxes will be decreased because of a temporary book-tax difference
Temporary difference: _______ E. Reporting continuing income items at gross pre-tax and nonrecurring items at net after-tax
Net operating loss: _______ F. A future tax obligation that indicates future taxes will be increased because of a temporary book-tax difference
Intraperiod tax allocation: _______ G. Book-tax differences that do not reverse in future years
Part 3: Match each accounting transaction with the appropriate definition. Each definition may be used more than one time. Assume U.S. GAAP for financial statement purposes and Internal Revenue Code for tax purposes.
Accounting Transaction Definition
Cash basis sales receipts: _______ A. Transactions that result in a taxable amount in the future (i.e., future tax obligation ~ deferred tax liability)
Litigation accruals: _______
Depreciable property: _______ B. Transactions that result in a deductible amount in the future (i.e., future tax benefit ~ deferred tax asset)
Municipal bond interest received: _______
Advanced rental receipts: _______ C. Transactions that result in a permanent difference
Fines paid for breaking the law: ________
Product warranty liabilities: _________
Part A)
Timing difference - D
Taxable income- C
FASB- G
Deduction-F
IRS- B
Future taxable income- E
Future deductible amoint- A
PART B)
Deffered tax asser- D
Deffered tax liabilities - F
Valuation allowance account-A
Permanent difference- G
Temporary difference- B
Net operating loss- C
Intraperid tax allocation- E
Part C)
Cash basis and salesnrecipts-A
Litigation accruals-c
Depreciable property- B
Municipal bond interests-A
Advanced rental receipt-A
Fine paid for breakng the law-c
Product warranty liabilities -C