CFA Practice Question

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CFA Practice Question

A difference between accounting profit and taxable income without tax consequences is a permanent difference. True or False?
Correct Answer: True

User Contributed Comments 7

User Comment
examinee It should be false. What about temporary difference?
stefdunk no, a difference between accounting income and taxable income is permanent. a temporary difference has to do with timing
LondonBoy I'm not sure that is the best way to look at it. I think you should arrive at the answer by thinking that there is a timing differences however as there are no tax consequences the tax difference will not reverse and therefore it is a permanent difference and not a temporary difference.
mordja Yep, agree with LondonBoy
vikram59 london boy is right..the key word here is without tax consequences!
boddunah key word "without tax consequences"
johntan1979 Without tax consequence = No effect from taxes

e.g. donation, municipal bond interest
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