Permanent differences between pretax book income and taxable income arises from

Question

Quizplus · Accepted Answer

Permanent differences arise when items are included in book income but are not taxable, or when items are taxable but not included in book income. Tax-exempt interest revenue is one such item that is included in book income but is not taxable, while certain fines are taxable but not included in book income. Therefore, the best choice is E. Depreciation on long-lived assets and bad debt expense can create temporary differences but not permanent differences.

Permanent Differences Between Pretax Book Income and Taxable Income Arises