Intermediate Accounting - Income Taxes

These flashcards cover key concepts related to income taxes as presented in Intermediate Accounting.

Taxable Temporary Difference

A difference between GAAP and tax bases of assets or liabilities that leads to deferred tax liabilities.

Deferred Tax Liability

A tax obligation that is deferred to a future date, created when taxable income is lower than financial accounting income.

Valuation Allowance

A contra asset account used to reduce the carrying amount of a deferred tax asset that is not expected to be realized.

Deductible Temporary Difference

A difference that leads to deferred tax assets, resulting when financial income is lower than taxable income.

Permanent Differences

Differences between taxable income and GAAP income that do not reverse over time.

Accrual Basis

An accounting method that records revenues and expenses when they are incurred, regardless of cash flow.

Installment Sale Receivable

An account receivable that results from a sale paid in installments rather than lump sum.

Tax Expense

The total tax liability incurred by a business during a certain period, measured against its taxable income.

Effective Tax Rate

The average rate at which a corporation's pre-tax profits are taxed.

NOL Carryforward

The ability to use a net operating loss in one year to offset taxable income in future years.