If an Expense Is Reported on the Tax Return Before

question 45

Multiple Choice

If an expense is reported on the tax return before it is reported on the financial accounting books

• A)the result is a deferred tax asset
• B)the result is a deferred tax liability
• C)there could be either a deferred tax asset or liability
• D)there is no effect as this is not a timing difference

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Definitions:

FUTA Purposes

Relates to the Federal Unemployment Tax Act, which imposes a payroll tax on businesses to fund state workforce agencies.

Federal Income Tax

This is a tax levied by the U.S. federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Withholding Allowances

Claims made on an employee's W-4 form that determine the amount of federal income tax withheld from their paycheck.

Gross Wages

Gross wages are the total earnings of an employee before any deductions like taxes, retirement contributions, and health insurance premiums are made.