In any given accounting period, the amount a firm reports as income before income taxes for financial reporting in comparison to the amount of taxable income that appears on its income tax return may differ due to

Question

Quizplus · Accepted Answer

The amount of income before income taxes reported for financial reporting and taxable income on the income tax return may differ due to both permanent and temporary differences. Permanent differences are differences in income or expenses that are recognized in one period for financial reporting but are never recognized for tax purposes, while temporary differences arise when income or expenses are recognized in a different period for financial reporting and tax purposes. Nominal differences are not recognized in accounting standards and are therefore not a factor in this scenario.

In Any Given Accounting Period, the Amount a Firm Reports