Taxable income of a corporation differs from pretax financial income because of
permanent Differences Temporary Differences

Question

Taxable income of a corporation differs from pretax financial income because of permanent Differences Temporary Differences

Quizplus · Accepted Answer

Taxable income of a corporation differs from pretax financial income due to both permanent and temporary differences. Permanent differences are items that are included in tax income or financial income but never both, affecting the tax rate but not taxable income over time. Temporary differences are timing differences between when items are recognized in financial income and when they are included in taxable income, which do reverse over time.

Taxable Income of a Corporation Differs from Pretax Financial Income