What Causes the Creation of a Deferred Tax Account on the Balance

question 3

Multiple Choice

What causes the creation of a deferred tax account on the balance sheet?

• A) Permanent differences in income tax accounting.
• B) The use of the straight-line method of depreciation for both reporting and tax purposes.
• C) Temporary differences in the recognition of revenue and expense for taxable income relative to reported income.
• D) Municipal bond revenue and life insurance premiums on officers.

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Definitions:

Design Patents

Legal protections granted to the ornamental design of a functional item for a period of time, ensuring others cannot copy or use the design without permission.

Plant Patents

Plant patents are granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant.

Chapter 13 Bankruptcy

A type of bankruptcy that allows individuals with a regular income to develop a plan to repay all or part of their debts over a three- to five-year period.

Unsecured Debts

Debt that is not backed by any collateral and solely depends on the borrower's creditworthiness.