Question

If a firm has a permanent difference between book income and taxable income for the year, but NO (change in) temporary differences for the year, then
A. tax expense on book income would be the same as the statutory rate

B. tax expense must exceed the tax payable for the year.

C. the tax payable must exceed the tax expense for the year.

D. tax expense would equal the tax payable for the year.

Answer 1

The correct answer is

D) tax expense would equal the tax payable

Explanation

Since their is no temporary difference change , so their will be no creation or alteration in deffered tax assets and liability which will have no effect on tax expense. Their is only permenant difference will will not be reversed. So the tax payable by the company as per tax law will be bceome tax expense for the company

So the correct answer is

D) tax expense would equal the tax payable