Jackey Company, a calendar year, accrual basis taxpayer, did not pay the $44,200 December rent on its commercial office space until January 8. As result, Jackey's accountant made a routine year-end accrual of $44,200 rent expense. Which of the following statements is true?

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DJackey can deduct the $44,200 accrued rent expense because, as an accrual basis taxpayer, expenses are deductible in the year in which the liability is incurred, regardless of when payment is made. The accrual of rent expense in December, for the December rent, meets the criteria for deduction in that year. The accrued rent expense results in a temporary book/tax difference because the expense is recognized in the financial statements in the year it is incurred (accrued) and deducted for tax purposes in the same year, even though it is paid in the following year. This difference between the financial accounting treatment and the tax treatment is temporary as it will reverse in the subsequent year when the payment is made.

Jackey Company, a Calendar Year, Accrual Basis Taxpayer, Did Not