Question

A difference between book income and tax income that __________ (increases / decreases) taxable income in the current year but will __________ (reduce / increase) taxable income in a future year is a(n) ________ book-tax difference.

Answer 1

Temporary difference

Step-by-step explanation:

The reason is that the temporary difference is due to allowable and disallowable expenses and returns for some period which in later years equals to the allowable or disallowable incomes and expenses. This is all because of the temporary differences.