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39 Cards in this Set

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the amount used to compute income tax payable
taxable income
for tax purposes companies use a _____for reporting revenues
modified cash basis
in cases where taxes will be lower in the future because accounting differences this is called
a deferred tax asset
in cases where taxes will be higher in the future because accounting differences this is called
a deferred tax liability
the difference between teh tax basis of an asset and its book amount
temporary difference
the deferred tax conseqences attributable to taxable temporary differences
deferred tax liability
Income tax expense has these components
deferred tax expense
current tax expense
Companies credit taxes due and payable to
Income tax payable
Companies credit the increase in deferred toaxes to
Deferred tax liability
The objectives of accounting for income taxes are
to recognize the amount of taxes payable or refundable for the current year

to recognize deferred tasx liabilities and assets for the futre tax consequenses of events already recognized in teh financial statements or tax returns
When a company does not expect to realize a favoable tax benefit for a portion of the deductivle temporary difference it must
establish a fvaluation allowance to recognized the reduction in the carrying amount of the deferred tax asset
The entry to recognize the valuation allowance is
debit income tax expense
credit allowance to reduce deferred tax asset to expected realizable value
When adjusting the allowance account at the end of the period, increases in teh deferred tax asset will have teh following entries
debit allowance to reduce deferred tax asset to expected realizable value
credit income tax expense
A company ___ an increase in a deferred tax liablity to income tax payable and ____ an increase in a deferred tax asset
adds, subtracts
the formula used to compute income tax expense
Income tax payable or refundable +/- Change in deferred income taxes = Total Income tax expense or benefit
A company should report Current and Deferred income tax on the income statement
separately
deductions or credits that cannot be utilized on the tax return during a year and that may be carried back to reduce taxable income or taxes paid in a prior year.
carry backs
An ________ is an excess of tax deductions over gross income in a year.
operating loss carryback
A tax credit carry back is the amount by which tax credtis available for utilization exceed statutory limitations
operating loss carryback
A ___________ is the amount by which tax credtis available for utilization exceed statutory limitations
tax credit carry back
deductions or credits taht cannot be utilized on the tax return during a year and that may be carried forward to reduce taxable income or taxes payable in a future year
carryforwards
the amount of income taxes paid or payable for a year as determined by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues for that year
CURRENT TAX EXPENSE
temporary differences that result in deductible amounts in future years when recovering or settling the related asset or liability, respectively
deductivle temporary difference
teh deferred tax conseqences attributable to deductivle temporary differences and carryforwards
deferred tax asset
the future effects on income taxes as measured by the enacted tax rate and provisions of the enacted tax law resulting from temporary differnces and carryforwardds at the end of the current year
deferred tax consequences
the change during the year in a company's deferred tax liabilities and assets
deferred tax expense
the deferred tax consequences attributable to taxable temporary differences
deferred tax asset
the future effects on income taxes as measured by the the enacted tax rate an dprovisions of the enacted tax law resulting from temporary differences and carryforwards at the end of the current year
deferred tax consequences
the change during the year in a company's deferred tax liabilities and assets
deferred tax benefits
domestic and foreign federal state and local taxes based on income
income taxes
the sum of current tax expense (benefit) and deferred tax expense (benefit)
income tax expense (benefit)
The excess of tasxable revenues over tax deductible expenses and exemptions for the year as defined by the governmental taxing authority
taxable income
temporary differences that result in taxable amounts in future years when recovering or settling the related asset or liability, respectively
taxable temporary differenc
an action that meets certain critera and that a company implements to realize a tax benefit for an operating loss or tax credit arryforward before it expires. Companies consider tax planning strategies when assessing the need for and amount of a valuation allowance for deferred tax assets
tax-planning strategy
a differenc between the tax basis of an asset or liabiliy and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when recovering or settling the reported amount of the asset or liability, respectively
temporary difference
the portion of a deferred tax asset for which it is more likely than not that a company will not realize a tax benefit.
valuation allowance
since permanent differences in taxable income and pretax financial income affect only the period in which they occur, companies recognize
no deferred tax consequences
What is the GAAP based tax rate
TAX EXPENSE/PRETAX INCOME
What is the Effective Tax rate
TAX EXPENSE/PRETAX INCOME