In 2020, Nutrient Company Reported Sales of $725,000 and Cost

question 48

Multiple Choice

In 2020, Nutrient Company reported sales of $725,000 and cost of goods sold of $480,000. During 2020, Nutrient's Inventory account increased $25,000 and its Accounts Payable account (which
Relates solely to the purchase of merchandise) decreased $18,000. Nutrient Company's payments to suppliers for inventory during 2020 were:

• A) $473,000
• B) $437,000
• C) $523,000
• D) $487,000

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Definitions:

Deferred Tax Balances

Amounts recorded on the balance sheet to reflect the future tax impact of temporary differences between the accounting and tax treatment of transactions.

Deferred Tax Asset Valuation Allowance

A reserve established against a deferred tax asset when it is likely that some or all of the asset will not be utilized.

Valuation Allowance

An accounting provision made to offset a portion of the deferred tax assets if it's more likely than not that some portion or all of the asset may not be realized.

Deferred Tax Asset

An accounting item that refers to a situation where a business has paid more taxes in advance than its current tax liability, or has carryover of losses that can be used to lower future tax payments.