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Question
The two broad categories of differences that result from determining financial income and taxable income are
A. temporary differences and originating differences.
B. temporary differences and reversing differences.
C. temporary differences and permanent differences.
D. permanent differences and deferred differences.
Answer
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Because covenant compliance can be jeopardized by mandated changes in accounting principles, many loan agreements have financial covenants that rely on the accounting rules in place when the loan is first granted.
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C. all operating costs, depreciation, taxes, and a fair return on invested capital.
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C. long-term incentives.
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C. negative restrictions.
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C. both lenders and borrowers.
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