Which of the Following Statements Concerning the Classification of Deferred

question 32

Multiple Choice

Which of the following statements concerning the classification of deferred tax assets and liabilities is true?

• A)A deferred tax asset is classified as noncurrent only if the company expects the future tax benefit to be received more than 12 months from the balance sheet date.
• B)All deferred tax assets and liabilities are treated as noncurrent.
• C)A deferred tax asset related to a bad debt reserve is classified as current if the related accounts receivable is classified as a current asset.
• D)A deferred tax asset related to inventory capitalization is classified as noncurrent only if the company uses a FIFO accounting method and the inventory to which the deferred tax asset relates will not be treated as sold within 12 months from the balance sheet date.

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Definitions:

Inputs

Resources such as labor, materials, and capital used in the production process to create goods and services.

Output

The total amount of goods or services produced by a person, machine, company, or industry.

Diseconomies of Scale

Occur when a company or business grows so large that the costs per unit increase. It represents the negative counterpart to economies of scale.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operations, with cost per unit of output generally decreasing with increasing scale.