Answer (D) is correct. Financial statements prepared under the income tax basis of accounting and financial statements prepared under GAAP differ when the tax basis of an asset or a liability and its reported amount in the GAAP-based financial statements are not the same. The result will be taxable or deductible amounts in future years when the reported amount of the asset is recovered or the liability is settled. Thus, certain revenues and expenses are recognized in different periods. An example is subscriptions revenue received in advance, which is recognized in taxable income when received and recognized in financial income when earned in a later period. Another example is a warranty liability, which is recognized as an expense in financial income when a product is sold and recognized in taxable income when the expenditures are made in a later period.