Which of the following describes a permanent difference?

Which of the following describes a permanent difference? 

A. A difference that will be corrected in an amended tax return.

B. A difference arising from an uncertain tax position.

C. A fundamental difference in what constitutes revenue or expense for GAAP and tax purposes.

D. A timing difference between the recognition of revenue or expense under GAAP and tax purposes.


Answer: A fundamental difference in what constitutes revenue or expense for GAAP and tax purposes.

Which of the following describes a temporary difference?

Which of the following describes a temporary difference? 

A. A difference that will be corrected in an amended tax return.

B. A difference arising from an uncertain tax position.

C. A fundamental difference in what constitutes revenue or expense for GAAP and tax purposes.

D. A timing difference between the recognition of revenue or expense under GAAP and tax purposes.


Answer: A timing difference between the recognition of revenue or expense under GAAP and tax purposes

If payables turnover has increased significantly since the prior year, this is an indication that which of the following assertions for accounts payable might be violated?

If payables turnover has increased significantly since the prior year, this is an indication that which of the following assertions for accounts payable might be violated? 

A. Existence or occurrence.

B. Completeness.

C. Rights and obligations.

D. Valuation and allocation.


Answer: Completeness

Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness assertion for purchases?

Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness assertion for purchases? 

A. Is an authorized purchase order required before the receiving department can accept a shipment or the vouchers payable department can record a voucher?

B. Are purchase requisitions prenumbered and independently matched with vendor invoices?

C. Is the unpaid voucher file periodically reconciled with inventory records by an employee who does not have access to purchase requisitions?

D. Are purchase orders, receiving reports, and vouchers prenumbered and periodically accounted for?


Answer: Are purchase orders, receiving reports, and vouchers prenumbered and periodically accounted for?