- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 9. Analysis of Income Taxes
- Subject 4. Temporary versus Permanent Differences
CFA Practice Question
Reported effective tax rate is equal to ______.
B. income tax expense / taxable income
C. income tax expense / accounting profit
A. taxes payable / taxable income
B. income tax expense / taxable income
C. income tax expense / accounting profit
Correct Answer: C
User Contributed Comments 4
| User | Comment |
|---|---|
| mattg | Key word: REPORTED i.e. reported on financial statements |
| Seal | Effective Tax Rate = inc tax exp / pre tax inc Reported Effective Tax Rate = inc tax exp / Accounting Profit. Is accounting profit same as pre tax inc? |
| johntan1979 | Yes, acct prof = pre tax inc And nope to mattg. Keyword is "effective". Answer A is statutory tax rate. |
| robbiecow | Accounting Profit = Total Revenue - (Cost of Good Sold + Operating Expenses +Taxes) |