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Chapter 5 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) White Ltd paid $10 000 for one year's rent in advance on 1 January 2011. The tax base of the prepaid rent asset at 30 June 2011 would be 2) For which of the following is a tax deduction not allowed: A) entertainment costs C) fines and penalties B) goodwill D) all of the above 3) The income tax payable by a company is based on its taxable income and this is calculated in accordance with the A) Trade Practices Act C Income Tax Assessment Act B) Corporations Act D) none of the above 4 Which of the following best describes accounting profit and taxable income? A) the rules for calculating taxable income are always stricter than the rules for calculating accounting profit B) the rules for calculating accounting profit are the same as the rules for calculating taxable O the rules for calculating accounting profit are different from the rules for calculating taxable D) the rules for calculating accounting profit are always stricter than the rules for calculating income income taxable income 5) Which of the following statements regarding the tax payable method is incorrect? A) the income tax expense for the period is the same amount as the income tax payable for the same period B) a balance day adjustment is recorded for income tax based on an estimate of taxation liability at the end of the financial year period appropriation of profits by governments the income tax expense for the period is different to the income tax payable for the same D) it is based on the proposition that the amount that has to be paid to the ATO is arn 6) Which of the following best describes the accounting treatment for interest expense? A) recorded as a liability if received in advance B) recorded as an expense as it accrues O) a deduction is allowed when paid D) recorded as an asset and expensed when used 7) 8) A deferred tax asset will result when: A) the carrying amount of an asset is greater than the asset's tax base B) the carrying amount of a liability is greater than the liability's tax base ) the carrying amount of an asset is less than the asset's tax base D) both B and C Chapter 5 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) White Ltd paid $10 000 for one year's rent in advance on 1 January 2011. The tax base of the prepaid rent asset at 30 June 2011 would be 2) For which of the following is a tax deduction not allowed: A) entertainment costs C) fines and penalties B) goodwill D) all of the above 3) The income tax payable by a company is based on its taxable income and this is calculated in accordance with the A) Trade Practices Act C Income Tax Assessment Act B) Corporations Act D) none of the above 4 Which of the following best describes accounting profit and taxable income? A) the rules for calculating taxable income are always stricter than the rules for calculating accounting profit B) the rules for calculating accounting profit are the same as the rules for calculating taxable O the rules for calculating accounting profit are different from the rules for calculating taxable D) the rules for calculating accounting profit are always stricter than the rules for calculating income income taxable income 5) Which of the following statements regarding the tax payable method is incorrect? A) the income tax expense for the period is the same amount as the income tax payable for the same period B) a balance day adjustment is recorded for income tax based on an estimate of taxation liability at the end of the financial year period appropriation of profits by governments the income tax expense for the period is different to the income tax payable for the same D) it is based on the proposition that the amount that has to be paid to the ATO is arn 6) Which of the following best describes the accounting treatment for interest expense? A) recorded as a liability if received in advance B) recorded as an expense as it accrues O) a deduction is allowed when paid D) recorded as an asset and expensed when used 7) 8) A deferred tax asset will result when: A) the carrying amount of an asset is greater than the asset's tax base B) the carrying amount of a liability is greater than the liability's tax base ) the carrying amount of an asset is less than the asset's tax base D) both B and C

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