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 rate | 25% |
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 |
Q14)
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
Q15)
Taxable income is (choose one):
A. £140,000
B. £150,000
C. £160,000
D. £130,000
E. £120,000
Q16)
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
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