Question

A future taxable amount means taxable income will be _______ relative to pretax accounting income, whereas a future deductible amount means taxable income will be ______ relative to accounting income Multiple Choice Decreased; decreased Increased: increased Decreased; increased

Answer 1

Increased

Decreased

Step-by-step explanation:

A future taxable amount mostly arise due to temporary difference that arise when related assets or liability is recovered or settled.

The temporary difference that arise when related asset or liability is recovered could also lead to future deductible amount.

What distinguish future taxable amount and future deductible amount is that future taxable amount will increase taxable income relative to pretax accounting while future deductible amount decreases taxable income relative to pretax financial income in future periods.

Answer 2

Increased, Decreased

Step-by-step explanation:

The reason is that when the taxable income increase this means that the business is earning more and if the business is earning more then this means that the business is paying more in taxes which is percentage of the profit earned by the business. So taxable income will increase in future due to increase in taxable income.

The tax allowed dedutions lessens the taxable income which means its increase in future will lessen the taxable income and as a result lower taxes would be paid in the future. So taxable income will decreased as a result of increase in the tax allowed deductions.