Question

All temporary differences are categorized in which of the following ways? (select all that apply.)

A. future deductible
B. amounts future taxable
C. amounts past taxable
D. amounts past
E. income amounts

Answer 1

Temporary differences in accounting are categorized as future deductible or future taxable, representing timings in the recognition of expenses and incomes for tax purposes.

Step-by-step explanation:

All temporary differences in accounting are categorized as either future deductible or future taxable. These differences arise because the recognition of income or expenses in the financial statements does not occur in the same period as it does for tax purposes.

When a future deductible difference exists, it means that the expense is reported on the financial statements before it is deductible for tax purposes, which will result in future tax deductions. Conversely, a future taxable difference implies that the income is reported on the financial statements before it is taxed, indicating future tax liabilities.