Question

Permanent differences include items that appear in the Federal income tax return as income or deduction and in the GAAP financial statements as revenue or expense but in different reporting periods.
True or False

Answer 1

Answer:

False

Explanation:

Permanent differences are differences that are as a result of difference between tax and the revenue report or expenses that will not be reversed in the future. The opposite of permanent differences is temporary difference.

Temporary differences are differences that occur as a result of difference between tax base and the amount of assets and liabilities on the balance sheet. A temporary difference is a taxable difference that will yield taxable returns in the future.  

From the question, items that appear in the federalincome tax return as income or deductions and in the GAAP financial statements as a revenue are Temporary differences.

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