Which of the following is true about intraperiod tax allocation?
A)It arises because certain revenue and expense items appear in the income statement either before or after they are included in the tax return.
B)It is required for the cumulative effect of changes in accounting principles but not for discontinued operations.
C)Its purpose is to allocate income tax expense evenly over a number of accounting periods.
D)Its purpose is to relate the income tax expense to the items which affect the amount of tax.

Question

Quizplus · Accepted Answer

The purpose of intraperiod tax allocation is to relate the income tax expense to the items which affect the amount of tax. This helps to understand the relationship between the amount of tax owed and the financial performance of the company. Option A is incorrect because the reason for intraperiod tax allocation is not related to timing differences between income statement items and tax return items. Option B is incorrect because intraperiod tax allocation is required for both cumulative effect of changes in accounting principles and discontinued operations. Option C is incorrect because the purpose of intraperiod tax allocation is not to allocate income tax expense evenly over a number of accounting periods.

Which of the Following Is True About Intraperiod Tax Allocation