Taxable income excludes _____ and uses the accounting methods that the _____ either require or permit firms to use for tax reporting.

Question

Quizplus · Accepted Answer

Permanent differences are items that are either included in taxable income or financial income but never both, thus they are excluded from taxable income calculations. The income tax law and regulations are what dictate the accounting methods firms must use for tax reporting, not U.S. GAAP or IFRS, which are used for financial reporting.

Taxable Income Excludes _____ and Uses the Accounting Methods That