Temporary Difference
Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference.
When the Income Tax Expense account is more than the Income Tax Payable account, this difference is known as Deferred Tax Asset.
When the Income Tax Expense account is less than the Income Tax Payable account, this difference is known as Deferred Tax Liability.
To explain: The future deductible amounts and describe two general situations that have this effect.
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INTER. ACCOUNTING - CONNECT+ALEKS ACCESS
- If the value of an item can be measured and reasonably determined, this item can be recognized in the financial statements as long as it O involves an exchange of cash and/or credit is granted. O provides some future economic benefit. meets the definition of an element of the financial statements. O has already occurred.arrow_forwardHow does accrued but uncollected revenue affect the bal-ance sheet?arrow_forwardWhat is unearned revenue? Why is it considered a liability? Does unearned revenue impact both the Balance Sheet and the Income Statement? Explain.arrow_forward
- What is meant by the term unearned revenue? Where should an unearned revenue account appear in the financial state-ments? As the work is done, what happens to the balance of an unearned revenue account?arrow_forwardHow do unearned revenues arise?arrow_forwardThe practice of recording advance payments from customers as a liability is an example of applying the O Going concern assumption. O Monetary unit assumption. O Historical cost principle. Revenue recognition principle.arrow_forward
- These are those which do not give rise to a right to receive (or an obligation to deliver) a fixed or determinable amount of money. Non-financial items Non-monetary items Monetary items Financial itemsarrow_forwardstate the differences between unearned revenue and accounts payable? both accounts are liabilities therefore what is the normal balance of liability and does it matter?arrow_forwardDescribe the accounting when there is a right of return.arrow_forward
- Explain the mind the relation between the recognition of deferred revenue associated with advance payments and the later recognition of revenue.arrow_forwardWhat is concept of unearned revenue?arrow_forwardWhich among the following suits best for Unearned revenue? a. Liability b. Expense c. Revenue d. Assetarrow_forward
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