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Flashcards in 20B Wrong Answers Deck (7):

How do you calculate a third quarter income tax provision (expense) in an interim statement, when tax rates were 30% in the 1st and 2nd quarter and 35% in the 3rd quarter?

(Total income from all 3 quarters x 35%)
- (income from 1st + 2nd quarters x30%)


Planned volume variance that is expected to be absorbed by the end of the fiscal year should be...

Deferred on interim reporting dates whether favorable or unfavorable


Inventory losses from market declines should not be...

Deferred beyond the interim period in which the loss occurs


If the market decline (in inventory) for interim reporting is considered to be temporary and will be recovered by year end...

No loss needs to be recognized


In the fourth quarter when a loss on inventory has not recovered, the loss is considered...

Permanent and should be recognized


The inventory loss is not recorded in...

The period of temporary decline, only in the period when the loss is
Considered permanent


A decline in inventory market price expected to be other than temporary should be...

2) a subsequent recovery in market value should be....

Recognized in period of decline

2) recognized as cost recovery in period of increase, but never
Above original cost