Listed below are terms followed by a list of phrases that describe or characterize each of the
Question:
Listed below are terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term.
ANSWER | TERM | PHRASE: DESCRIPTION OR CHARACTERIZATION |
| 1. TAXABLE INCOME | A. It is usually a revenue or expense item that is excluded or not deductible in determining the actual tax expense. |
| 2. OPERATING LOSS CARRYBACK | B. It reduces the net deferred tax asset and is allocated between current and noncurrent in the Balance Sheet because it represents a permanent portion. |
| 3. DEFERRED TAX ASSET | C. It will create a deferred tax asset for future tax periods. |
| 4. VALUATION ALLOWANCE | D. It arises when future taxable amounts are created by temporary differences. |
| 5. PRIOR PERIOD ADJUSTMENT | E. It produces future taxable amounts or future deductible amounts because the taxable income on the Financial Statements does not equal the current tax expense. |
| 6. PERMANENT DIFFERENCE | F. It would be either debited or credited directly to Retained Earnings net of any tax effect. |
| 7. TEMPORARY DIFFERENCE | G. It will generate a refund of taxes paid in prior tax years. |
| 8. PERMANENT TAX-FREE ITEMS | H. It arises when future deductible amounts are created by temporary differences. |
| 9. OPERATING LOSS CARRYFORWARD | I. Earnings from state or local governmental bonds |
| 10. DEFERRED TAX LIABILITIY | J. It is the amount found in the Financial Statements and is also basis for computing the tax liability for the taxes currently payable. |
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann