Final answer:
The statement is true; comprehensive allocation in accounting does indeed affect the income tax reported in an accounting period due to temporary differences that arise between tax and accounting calculations, leading to deferred tax assets or liabilities.
Step-by-step explanation:
The statement suggests that under comprehensive allocation, the income tax reported in an accounting period is affected for a few temporary differences. This assertion is generally considered true. In accounting, temporary differences are discrepancies between the tax base of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years. These differences give rise to deferred tax liabilities or assets, which are included in the determination of income tax expense or benefit under comprehensive allocation, and therefore, affect the income tax reported.
Comprehensive allocation is a concept in accounting that involves recognizing the tax effects of all temporary differences and carryforwards in the financial statements. Temporary differences may stem from several areas, such as depreciation methods used for tax and accounting purposes, or the recognition of revenue and expenses in different periods for accounting and tax purposes.
Understanding the impact of temporary and permanent fiscal policies also contributes to grasping the broader implications of fiscal decisions on aggregate demand and economic behavior. Fiscal policies, temporary or permanent, such as tax cuts, can lead to changes in consumer spending and investment by firms, ultimately leaving a significant economic footprint.