Question: Indicate and explain whether the following situation should be treated as a temporary difference or a permanent difference and support your answer. For accounting purposes,

Indicate and explain whether the following situation should be treated as a temporary difference or a permanent difference and support your answer.

For accounting purposes, a company reports revenue for installment sales on the accrual basis. For income tax purposes, it reports the revenues by the installment-sales method, deferring recognition of gross profit until cash is collected.

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