Accounting for income taxes The accounts of Tal Company show the


Accounting for income taxes

The accounts of Tal Company show the following items (all in pounds) for fiscal 2020: 

Pretax income in the P&L     £170,000
Income tax expense in the P&L£40,000
The tax rate25%
Temporary difference between book and tax due to depreciation(That is, depreciation for tax purposes is higher than depreciation expenses by 20,000)£20,000


Permanent differences are (choose one):

A. increasing taxable income by £20,000

B. Reducing taxable income by £5,000

C. Increasing taxable income by £10,000

D. Reducing taxable income by £10,000

E. Increasing taxable income by £5,000


Taxable income is (choose one):

A. £140,000

B. £150,000

C. £160,000

D. £130,000

E. £120,000


Change in deferred tax liability is (choose one):

A. Increase deferred tax liabilities by £20,000

B. Decrease deferred tax liability by £20,000

C. Increase deferred tax liabilities by £5,000

D. Decrease deferred tax liabilities by £5,000

E. Increase deferred tax liabilities by £10,000

It’s that simple.Pay only when you are satisfied.

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