On December 31, 2014, XYZ Inc

question 6

Multiple Choice

On December 31, 2014, XYZ Inc. has an account receivable of $2,000 for consulting fees it earned during the year. Consulting revenues are only taxable when collected. XYZ normally receives payment for the services rendered one month after the client is invoiced. Assuming a 20% tax rate, these revenues shall result in:

• A) a deferred tax liability of $2,000.
• B) a deferred tax liability of $400.
• C) a deferred tax asset of $400.
• D) a deferred tax asset of $2,000.

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