Part $1$

Book$-$to$-$tax differences $($BTDs$)$ are adjustments that cause book income to differ from taxable income, and can come in the form of either permanent adjustments or temporary adjustments.

A permanent adjustment is a difference between book and tax that will never be reversed, while a temporary adjustment is a timing a difference that will eventually reverse itself.

When working to get to taxable income you will have to keep track of permanent differences that will only affect your taxable income in the current year,

as well a temporary differences which affect your taxable income in multiple periods. Determine whether the book$-$to$-$tax differences below are permanent or temporary.

Book$-$to$-$tax Difference Adjustment Type

Federal income tax expense

Accrued Compensation

Meals and Entertainment

Fines and Penalties

Depreciation Expense

Accrued Bonus

Prepaid Rent

Municipal Bond Interest

Prepaid Insurance

Deferred Revenue

Accrued Vacation

Membership Dues $($Social Organization$)$