Which of the Following Statements Regarding Tax-Effect Accounting Is Incorrect

question 7

Multiple Choice

Which of the following statements regarding tax-effect accounting is incorrect?

• A) The tax-effect method of accounting for income tax determines that temporary differences may arise, resulting in the recognition of either a liability or an asset.
• B) The tax-effect method for calculating income tax expense is where the taxable income is multiplied by the tax rate.
• C) A tax loss can only be carried forward as a future tax benefit if it is probable that the entity will earn taxable income in the future.
• D) A deferred tax liability will occur where taxable income is less than accounting profit in the current period.

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Definitions:

Home Environments

encompasses the physical, emotional, and social conditions of a person's living situation which can significantly influence their development and well-being.

Nature

The phenomena of the physical world collectively, including plants, animals, the landscape, and other features and products of the earth as opposed to humans or human creations.

Nurture

The influence of external factors such as environment, education, and care on an individual's development.

Cognitive Revolution

A period during the 1950s to 1970s marked by the adoption of a new approach to studying the mind, emphasizing internal mental processes.