Which of the Following Transactions Would Typically Result in the Creation

question 30

Multiple Choice

Which of the following transactions would typically result in the creation of a deferred tax liability?

• A)Rents received in advance are taxable when received but are not recognized in pretax financial income until earned.
• B)Gross profit on installment sales is recognized currently in pretax financial income but is not taxable for income tax purposes until cash is received.
• C)Losses recognized in pretax accounting income from an investment in a subsidiary are accounted for by the equity method but not deductible for income tax purposes until the investment is sold.
• D)A contingent liability is recognized as an expense currently in pretax financial income but not deductible for income tax purposes until paid.

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Definitions:

Psychological Health

A state of well-being in which an individual realizes their own abilities, can cope with the normal stresses of life, work productively, and contribute to their community.

Medicine

The science and practice of diagnosing, treating, and preventing diseases and injuries in humans and animals.

Open Systems View

A perspective that sees organizations as entities that interact with their environment, adapting to changes and exchanging resources.

Systems of Communication

The structured methods and processes through which information is transmitted and received within an organization or between individuals.