Temporary differences arise when expenses or losses are deducted to compute taxable income $\begin{array}{lll}
& \text { Prior to the Time They}& \text { After the Time They Are}\
& \text { Are Deducted to Compute}& \text {Deducted to Compute}\
& \text {Pretax Financial Income}& \text {Pretax Fingncial Income}\
\text { I. } & \text { Yes } & \text { Yes } \
\text { II. } & \text { No } & \text { Yes } \
\text { III. } & \text { Yes } & \text { No } \
\text { IV } & \text { No } & \text { No }
\end{array}$

Question

Quizplus · Accepted Answer

Temporary differences refer to differences between the carrying value of an asset or liability and its tax base. This is caused by timing differences, such as when expenses or losses are deducted for tax purposes in a period different from when they are recognized in financial statements. This concept is related to tax accounting, which is covered in Financial Accounting textbooks rather than Managerial Accounting. Therefore, this question belongs to Financial Accounting.

Temporary Differences Arise When Expenses or Losses Are Deducted to Compute