Situations which require that future income tax be reported involve a difference that is called which of the following?
A) A permanent difference.
B) A reversing tax inverse difference.
C) A temporary difference.
D) A contingent liability.

Question

Quizplus · Accepted Answer

Temporary differences between the book (financial reporting) and tax bases of assets and liabilities result in deferred tax liabilities or assets. These differences will reverse or "settle" in the future, affecting taxable income at that time. Permanent differences, on the other hand, do not reverse over time.

Situations Which Require That Future Income Tax Be Reported Involve