Business College

Times-Roman Publishing Company reports the following amounts in its first three years of operation: ($ in thousands) 2021 2022 2023 Subscription revenue recognized (earned) $ 350 $ 360 $ 320 Subscription payments received in cash 390 340 360 The difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine subscriptions being reported for tax purposes in the year received, but reported in the income statement in later years when the performance obligation is satisfied. The income tax rate is 25% each year. Times-Roman anticipates profitable operations in the future. Required: 1. What is the balance sheet account that gives rise to a temporary difference in this situation

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Answer 1

Answer: Unearned subscription revenue.

Explanation:

Tax is made on a cash basis which means that a transaction is eligible for taxation once cash has been paid for it. Businesses however have to use the Accrual basis which only record transactions in the period that they have been incurred.

In this scenario, there is more subscription payment in cash than the company recognized which means that the company has not yet delivered the service they were paid for and so could not recognize the subscriptions. They will however be taxed on those amounts because the cash has come in.

The account giving this temporary difference is therefore the Unearned Subscription Revenue account.

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Below are several names of companies and their founders. Explain whether the business creates and sells innovative products or uses innovative methods or both

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Answer:

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Which of the following statements about annuities are true? Check all that apply. An ordinary annuity of equal time earns less interest than an annuity due. Annuities are structured to provide fixed payments for a fixed period of time. When equal payments are made at the beginning of each period for a certain time period, they are treated as ordinary annuities. When equal payments are made at the beginning of each period for a certain time period, they are treated as an annuity due.

Answers

Answer:

The true statements are:

Annuities are structured to provide fixed payments for a fixed period of time.

When equal payments are made at the beginning of each period for a certain time period, they are treated as an annuity due.

Explanation:

Annuities provide fixed payments for a lifetime or a specified period of time.  With equal payments at the beginning of each period for a fixed period of time, the annuity is regarded as an annuity due.  But with equal payments at the end of the period, it is an ordinary annuity.  A common example of annuity due is payment for Rent at the beginning of the month or year.  If the Rent is paid at the end of the month or year, it is an ordinary annuity.

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