which of the following represent temporary book-tax differences? course hero

Which of the following are temporary differences that are normally?

Terms in this set (6) Which of the following are temporary differences that are normally classified as expenses or losses and are deductible after they are recognized in financial income? Depreciable property. Fines and expenses resulting from a violation of law.

What is deferred income tax?

A deferred income tax is a liability recorded on a balance sheet resulting from a difference in income recognition between tax laws and the company's accounting methods. For this reason, the company's payable income tax may not equate to the total tax expense reported.

What is a taxable temporary difference?

Taxable temporary differences are those on which tax will be charged in the future when the asset (or liability) is recovered (or settled). Deductible temporary differences are those which will result in tax deductions or savings in the future when the asset (or liability) is recovered (or settled).

What is deferred tax example?

Examples of deferred tax assets Net operating loss: The business incurred a financial loss for that period. Tax overpayment: You paid too much in taxes in the previous period. Business expenses: When expenses are recognized in one accounting method but not the other.

What does tax-deferred mean when it comes to 401k?

What Is a Tax-Deferred Savings Plan? A tax-deferred savings plan is an investment account that allows a taxpayer to postpone paying taxes on the money invested until it is withdrawn, generally after retirement. The best-known such plans are individual retirement accounts (IRAs) and 401(k)s.

What is the benefit of tax-deferred?

Tax-deferred means you don't pay taxes until you withdraw your funds, instead of paying them upfront when you make contributions. With tax-deferred accounts, your contributions are typically deductible now, and you'll only pay applicable taxes on the money you withdraw in retirement.

What is the difference between current tax and deferred tax?

Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period. Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences.

What is the difference between tax-deferred and tax free?

Tax-deferred accounts allow earnings to grow tax free until you withdraw the money. Tax-free means no taxes are imposed on earnings or withdrawals at any time.