Temporary Differences

Question 1

Define “taxable temporary differences.”

Answer 1

Differences that initially cause a postponement in the payment of taxes.

Question 2

What type of deferred tax accounts do deductible temporary differences cause?

Answer 2

They cause Deferred tax assets.

Question 3

Define “deferred tax asset.”

Answer 3

The future tax effect of a future deductible difference

Question 4

List the two categories of temporary differences

Answer 4

Taxable Temporary Differences;

Deductible Temporary Differences

Question 5

Are originating or future reversing temporary differences used in determining the change in deferred tax accounts?

Answer 5

Future reversing temporary differences are used