If a company has changes due to errors, it should use the current and prospective approach to account for the change.

True

False

A __________ will result in a future increase in taxes payable if there are temporary differences in the current period.

Deferred tax expense

Deferred revenue

Deferred tax asset

None of these answers are correct

Deferred tax liability

The purchase of a company outstanding capital stock would be reported as a ___________ in the ____________ activities section of the Statement of Cash Flows.

cash inflow ; investing

cash outflow ; financing

cash outflow ; operating

none of these answers are correct

cash outflow ; investing

Which of the following statements is false regarding loss carrybacks and loss carryforwards?

A net operating loss occurs when tax-deductible expenses exceed taxable revenues.

None of these answers are correct

A loss carryforward can be done without having to carryback first.

Net operating losses can be carried back 2 years and forward 20 years.

Loss carrybacks must be applied to the latest year first.

Which of the following statements is not true about a deferred tax liability?

It represents a future sacrifice

None of these answers are correct

It is a present obligation

It results from a past transaction

It causes taxable income in future periods to be less than financial income

With respect to the valuation of a deferred tax asset, which of the following statements is true?

The deferred tax asset should be reduced if the likelihood that it will not be fully realized is less than 50 percent.

The deferred tax asset should be reduced if the likelihood that it will not be fully realized is equal to 50 percent.

None of these answers are correct.

The deferred tax asset should be reduced if the likelihood that it will not be fully realized is equal to 25 percent.

The deferred tax asset should be reduced if the likelihood that it will not be fully realized is more than 50 percent.

Consider the following facts: - Company A sells contracts that have multiple performance obligations. Company A should account for the contracts as a single performance obligation when:

each service is interdependent and interrelated.

determination cannot be made.

the product is distinct within the contract.

None of these answers are correct

both performance obligations are distinct but interdependent.