Credits Are Used to

question 105

Multiple Choice

Credits are used to

• A) decrease both asset and liability accounts
• B) decrease liability accounts and increase asset accounts.
• C) increase both asset and liability accountss.
• D) increase liability accounts and decrease asset accounts.

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Definitions:

Tax Shelter

An investment strategy or financial arrangement designed to reduce, defer, or eliminate tax liabilities.

Deferred Taxes

Tax liabilities or assets that arise due to differences between the financial accounting and tax treatment of transactions, recognized in corporate financial statements.

Investment Earnings

The return on investment, including income and capital gains.

Traditional IRA

A retirement savings account that allows individuals to make pre-tax contributions, with taxes on earnings deferred until withdrawals begin.