Which of the Following Is the Most Likely Item to Result

question 58

Multiple Choice

Which of the following is the most likely item to result in a deferred tax asset?

• A) Using accelerated depreciation for tax purposes but straight-line depreciation for accounting purposes
• B) Using the completed-contract method of recognizing construction revenue tax purposes,but using percentage-of-completion method for financial reporting purposes
• C) Prepaid expenses
• D) Unearned revenues

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Definitions:

Interest Collected

The amount of interest payments received by a lender from a borrower over a specified period of time.

Percent of Receivables Method

A method used in accounting to estimate bad debts expense based on a percentage of accounts receivable judged to be uncollectible.

Unadjusted Trial Balance

A financial report that shows the balances of all accounts, including assets, liabilities, equity, income, and expenses before any adjustments are made for the accounting period.

Bad Debts Expense

An expense reported on the income statement reflecting the cost of accounts receivable that a company does not expect to collect.