1. Taxable amounts are temporary differences that:
a) Decrease taxable income in future years
b) Require the recording of deferred tax liability
c) Require the recording of a deferred tax asset
d) None of the above
2. A deferred tax liability represents the
a) increase in taxes saved in future years as a result of deductible temporary differences
b) decrease in taxes saved in future years as a result of deductible temporary differences
c) increase in taxes payable in future years as a result of taxable temporary differences
d) none of the above
3. Moore Company has sales of $200,000 during 2014 and records it as sales revenue on its income statement. The Company wishes to delay the reporting of a portion of that amount for tax purposes and uses the installment sales method for tax purposes. $60,000 of collections occurred during 2014 and the remainder will occur in 2015. What is the amount of the temporary difference at the end of the year 2014?
a) $200,000
b) $140,000
c) $60,000
d) $0
4. The use of accelerated depreciation for tax purposes and straight-line depreciation for book purposes results in
a) expense items and deductions being taken for tax purposes before book purposes.
b) expense items and deductions being recorded for book purposes before tax purposes.
c) income being included for tax purposes before book purposes.
d) income being recorded for book purposes before tax purposes
5. The Moore Company records income at the time of sale for book purposes and uses the installment sales method for tax purposes. Assume that use of the installment sales method is the only temporary difference between book and tax purposes for 2014. Sales for 2014 were $300,000. Collections for 2014 were $90,000, and collections for 2015 were $210,000. The tax rate is 30 percent for both years. The 2014 journal entry for deferred taxes will include a
a) credit to Deferred Tax Asset of $63,000
b) debit to Deferred Tax Liability of $63,000
c) debit to Deferred Tax Asset of $63,000
d) credit to Deferred Tax Liability of $63,000
6. How should deferred taxes be reported on the balance sheet? Choose the best answer.
a) as a reduction or addition to the related asset
b) in two separate accounts: one for the net current amount and one for the net noncurrent amount
c) in two separate accounts: one for the net debit amount and one for the net credit amount.
d) as a non-current item