In computing net business income for income tax purposes, which of the following statements is INCORRECT? Question 3Answer a. Income tax paid is not allowed as a business deduction. b.Depreciation is not allowed as a business deduction. c. Capital cost allowance is not allowed as a business deduction. d. An arbitrary reserve is not allowed as a business deduction.

Income from business or profession is calculated based on the method of accounting regularly…

Answered: In computing net business income for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

Generally accepted accounting principles usually require the use of accrual accounting to “fairly present” income. If the cash receipts and disbursements method of accounting will “clearly reflect” taxable income, why does this method not usually also “fairly present” income?
1. Which of the following differences would result in future taxable amounts? a. Revenues or gains that are taxable before they are recognized in financial income. b. Expenses or losses that are deductible after they are recognized in financial income. c. Expenses or losses that are deductible before they are recognized in financial income. d. Revenues or gains that are recognized in financial income but are never included in taxable income. 2. If a company constructs a laboratory building to be used as a research and development facility, the cost of the laboratory building is matched against earnings as a. research and development expense in the period(s) of construction. b. depreciation deducted as part of research and development costs. c. depreciation or immediate write-off depending on company policy. d. an expense at such time as productive research and development has been obtained from the facility. 3. How should research and development costs be accounted for, according…
A temporary difference which would result in a deferred tax liability is a) installment sale included in accounting income at the time of sale but not in tax incomeb) subscription received in advancec) research cost is recognized as expense in accounting income but not in tax incomed) Dividend revenue on equity investment
How does sources of financing affects tax liability of the business? (Focus only one Source of Financing)
What is the accounting treatment for discontinued operations? A : It is reported at its gross amount as an "other revenue or gain" or "other expense or loss". B : It is reported as an "other revenue or gain" or "other expense and loss", net of tax. C : It only needs to be disclosed in the footnotes of the financial statements. D : It may be treated as sales revenue (if it is a gain) and as an operating expense (if it is a loss).
For purposes of the accumulated earnings tax, earnings can be accumulated for reasonable needs of the business. List several examples of what is included and several examples of what is not included in the reasonable needs of the business
Why company tax rate is always different from company accounting income?
Answer both in detail
Discuss the main reasons why accounting profit of a business has to be adjusted when computing taxable income.
1. Which temporary difference would result in a deferred tax asset? a. Tax penalty or surcharge b. Dividend received on share investment c. Excess tax depreciation over accounting depreciation d. Rent received in advance included in taxable income but deferred for financial accounting 2. The deferred tax expense is the a. Increase in deferred tax asset minus the increase in deferred tax liability. b. Increase in deferred tax liability minus the increase in deferred tax asset. c. Increase in deferred tax asset plus the increase in deferred tax liability. d. Decrease in deferred tax asset minus the increase in deferred tax liability.
Please Introduction and explanation 1 and 2 question answers both subparts answer no plagiarism please and what is correct option and incorrect option why? Explanation please
A company determines that it is more likely than not that a portion of a deferred tax asset will not be realized. Due to the value of the beginning of the period balance, this determination caused a valuation allowance account to decrease during the current period. This situation will cause Income Tax Expense to decrease. O True O False

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