Which of the Following Temporary Differences Ordinarily Creates a Deferred

question 27

Multiple Choice

Which of the following temporary differences ordinarily creates a deferred tax asset?

• A) Accrued warranty costs
• B) Depreciation
• C) Installment sales
• D) Prepaid insurance

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Definitions:

Manufacturing Plant

A facility used for the production and assembly of goods and products.

Material Misstatements

Inaccuracies or omissions of significant information that could influence the decision-making process of users of financial statements.

Registration Statement

A set of documents filed with a regulatory body, such as the SEC, detailing the particulars of a new security to be issued to the public.

Statute of Limitations

Legislation that specifies the longest duration allowed to initiate legal action, varying by the nature of the claim or case.