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Generally, when considering the differences between the accounting treatment and the income tax treatment of a particular item the accounting treatment is based on: Select one: 1. cash flows 2. cash flows adjusted for depreciation charges 3. accrual accounting and is subject to the requirements of accounting standards 4. the income tax legislation
Expert Answer
Accounting treatment is based on the accounting standards setup by its regulatory body. generally called as U.S.GAAP.
Usually accounting system used is Accrual basis of accounting for arriving at accounting income.
so the answer is option 3)
