Final answer:
A temporary difference resulting from an expense (deduction) can create a taxable temporary difference or a deductible temporary difference depending on the timing of the deduction for tax purposes and recognition in financial statements.
Step-by-step explanation:
A temporary difference resulting from an expense (deduction) creates a taxable temporary difference when the amount of the expense is deducted for tax purposes in a different period than it is recognized in financial statements.
For example, if a company incurs an expense in one year but deducts it for tax purposes in the following year, it creates a taxable temporary difference.
A deductible temporary difference, on the other hand, occurs when the amount of the expense is recognized for tax purposes in a different period than it is deducted in financial statements.
For instance, if a company deducts an expense in one year for tax purposes but recognizes it in financial statements in the following year, it creates a deductible temporary difference.