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

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

Financial Accounting

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

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Multiple Choice

Which of the following statements is true with respect to permanent differences in accounting?

Permanent differences affect both the timing and the total amount of taxable income.

Permanent differences are recorded as adjusting journal entries at the end of each period.

Permanent differences are temporary and will reverse in future periods.

Permanent differences arise when certain revenues or expenses are recognized for accounting purposes but never for tax purposes.

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Verified step by step guidance

Understand the concept of permanent differences: Permanent differences occur when certain revenues or expenses are recognized for accounting purposes but are never recognized for tax purposes. These differences do not reverse over time and are not temporary.

Clarify the impact of permanent differences: Permanent differences affect the total amount of taxable income but do not affect its timing. They are not temporary and do not reverse in future periods.

Review the treatment of permanent differences in journal entries: Permanent differences are not recorded as adjusting journal entries because they are not temporary and do not require future adjustments.

Compare the given statements: Evaluate each statement in the problem to determine its accuracy based on the definition and characteristics of permanent differences.

Identify the correct statement: The correct statement is that permanent differences arise when certain revenues or expenses are recognized for accounting purposes but never for tax purposes.