Revenue from installment sales is recognized in the period received for tax purposes and recognized in the period earned for accounting purposes.If these periods are different, this is an example of a

Question

Quizplus · Accepted Answer

When revenue from installment sales is recognized in a different period for tax purposes and accounting purposes, it creates a temporary difference. This temporary difference will ultimately cause interperiod tax allocation, as the revenue recognized for accounting purposes will be taxed in a later period when it is recognized by the tax authority. Therefore, choice C is the best answer.

Revenue from Installment Sales Is Recognized in the Period Received