If a company incurs $1,500 of expenditures for meals and entertainment, this amount represents a permanent difference.

Question

Quizplus · Accepted Answer

Expenditures for meals and entertainment typically represent a temporary difference because they are only partially deductible under tax laws, meaning the full expense can be recognized in financial accounting, but only a portion may be deductible for tax purposes, leading to a temporary timing difference between financial and tax reporting.

If a Company Incurs $1,500 of Expenditures for Meals and Entertainment