A Deferred Tax Asset Would Result If

question 60

Multiple Choice

A deferred tax asset would result if

• A)a company recorded a tax penalty in 2010 that it paid in 2011
• B)a company recorded more taxable depreciation in 2010 for an asset acquired in 2008
• C)a company recorded more warranty expense in 2010 than cash paid in 2010 for warranty repairs
• D)a company recorded more interest expense in 2010 than cash paid in 2010 for interest

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Definitions:

Payout Ratio

Measures the percentage of earnings distributed in the form of cash dividends; computed by dividing cash dividends declared on common stock by net income.

Net Income

The amount of money remaining from revenues after subtracting all costs, expenses, and taxes, indicating the profit earned.

Dividends

Payments made by a corporation to its shareholder members, distributed from the company's profits.

Note Payable

A written agreement where one party promises to pay another a definite sum of money at a specified future date or on demand.