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:

Two-Tail Test

A statistical hypothesis test in which the critical area of a distribution is two-sided and tests whether a sample is either greater than or less than a certain range of values.

Sample Proportions

The ratio of members within a sample that satisfy a given characteristic, often used to estimate the proportion of the characteristic in the entire population.

Standard Error

The standard deviation of the sampling distribution of a statistic, often used in constructing confidence intervals around a sample statistic to estimate the population parameter.

Test Statistic

A metric deduced from a sample's data in the process of hypothesis testing, which aids in determining the rejection of the null hypothesis.