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Permanent Temporary
Differences Differences
a. No No
b. No Yes
c. Yes Yes
d. Yes No
Taxable income differs from pretax financial income due to permanent and temporary differences. Temporary difference will reverese in the future while permanent difference will not reverse.
Option C is the correct answer . Both of the two differences make the pretax financial income and taxable income differs . But deferred tax account arises from temporary differences only.
