Choose the correct answer

36. Taxable income of a corporation

a. differs from accounting income due to differences in intraperiod allocation between the two methods of income determination.

b. differs from accounting income due to differences in interperiod allocation and permanent differences between the two methods of income determination.

c. is based on generally accepted accounting principles.

d. is reported on the corporation's income statement.

37. The deferred tax expense is the

a. increase in balance of deferred tax asset minus the increase in balance of deferred tax liability.

b. increase in balance of deferred tax liability minus the increase in balance of deferred tax asset.

c. increase in balance of deferred tax asset plus the increase in balance of deferred tax liability.

d. decrease in balance of deferred tax asset minus the increase in balance of deferred tax liability.

38. An example of a permanent difference is

a. proceeds from life insurance on officers.

b. interest expense on money borrowed to invest in municipal bonds.

c. insurance expense for a life insurance policy on officers.

d. All of these answers are correct.

39. Which of the following will not result in a temporary difference?

a. Product warranty liabilities

b. Advance rental receipts

c. Installment sales

d. All of these will result in a temporary difference.

40. Which of the following is not considered a permanent difference?

a. Interest received on municipal bonds.

b. Fines resulting from violating the law.

c. Premiums paid for life insurance on a companys CEO when the company is the beneficiary.

d. Stock-based compensation expense.

41. Recognition of tax benefits in the loss year due to a loss carryforward requires

a. the establishment of a deferred tax liability.

b. the establishment of a deferred tax asset.

c. the establishment of an income tax refund receivable.

d. only a note to the financial statements.

42. Major reasons for disclosure of deferred income tax information is (are)

a. better assessment of quality of earnings.

b. better predictions of future cash flows.

c. predicting future cash flows for operating loss carryforwards.

d. All of these answer choices are correct.