Two types of differences exist between computing income for tax purposes and computing income for financial accounting purposes. The differences are
A)defined benefit taxes and defined contribution taxes.
B)deferred tax assets and deferred tax liabilities.
C)revenues and expenses.
D)temporary and permanent.

Question

Quizplus · Accepted Answer

The two types of differences between computing income for tax purposes and computing income for financial accounting purposes are temporary and permanent. Temporary differences arise when items are recognized differently for tax and accounting purposes, but will eventually reverse in the future. Permanent differences are items that are recognized for tax or accounting purposes but will never reverse in the future. These differences can affect the amount of income reported and taxes owed for a specific period.

Two Types of Differences Exist Between Computing Income for Tax