1. In which of these cases is the realization principle applied differently for tax purposes if the taxpayer is cash basis rather than accrual basis? The taxpayer receives January salary income in December. The taxpayer pays January's salary expense in December. There is no difference in the application of the realization principle in these cases. The realization principle does not apply to cash basis taxpayers.
2. A company that measures their taxable income from January through December every year has what type of taxable year? A permanent year A fiscal year A calendar year None of these are correct
3. What is a temporary source of a book/tax difference? Interest on state and local bonds Meals and entertainment expense Fines and penalties Bad debts
4. In which of the following instance(s) is the measurement of net income for tax purposes different for accrual basis and cash basis calendar year taxpayers?In December, the taxpayer signs a contract for routine legal service to be performed and paid for in December. The taxpayer's equipment is repaired in November and the bill is paid in November. The measurement of net income is different in both of these cases. Net income would be the same under both cash and accrual methods.