Under the accrual method,what is the current year temporary difference in FY2016?

Question

Quizplus · Accepted Answer

To calculate the current year temporary difference under the accrual method, we need to find the difference between the tax basis and the book basis of current year items. According to the financial statements in the picture, the tax basis of current year items is 50,000 (line 5) and the book basis is 55,000 (line 1). Therefore, the current year temporary difference is 5,000 (55,000 - 50,000). Option C is the closest to 5,000.

Under the Accrual Method,what Is the Current Year Temporary Difference