Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following items is NOT an adjustment to taxable income or net loss when computing current earnings and profits (E&P)?

Dividends received deduction

Federal income tax refunds received

Tax-exempt interest income

Life insurance proceeds on key employees

Previous problemNext problem

Verified step by step guidance

Step 1: Understand the concept of Earnings and Profits (E&P). E&P is a measure used in tax accounting to determine a corporation's ability to pay dividends to shareholders. It is calculated by adjusting taxable income for certain items, both additions and subtractions.

Step 2: Review the adjustments typically made to taxable income or net loss when computing E&P. These adjustments include items such as tax-exempt income, non-deductible expenses, and certain deductions that are allowed for tax purposes but excluded from E&P calculations.

Step 3: Analyze each option provided in the problem: Dividends received deduction, Federal income tax refunds received, Tax-exempt interest income, and Life insurance proceeds on key employees. Determine whether each item is typically included or excluded in the computation of E&P.

Step 4: Note that the Dividends Received Deduction (DRD) is a tax deduction allowed to corporations for dividends received from other corporations. While it reduces taxable income, it is not an adjustment to E&P because E&P focuses on the corporation's ability to pay dividends, not tax deductions.

Step 5: Conclude that the correct answer is the Dividends Received Deduction, as it is not an adjustment to taxable income or net loss when computing current E&P. The other items (Federal income tax refunds, tax-exempt interest income, and life insurance proceeds) are adjustments to E&P because they affect the corporation's financial ability to pay dividends.