A Deferred Tax Liability Arising from the Use of an Accelerated

question 14

Multiple Choice

A deferred tax liability arising from the use of an accelerated method of depreciation for tax purposes and the straight-line method for financial reporting purposes would be classified on the balance sheet as

• A) a current liability.
• B) a noncurrent liability.
• C) a current liability for the portion of the temporary difference reversing within a year and a noncurrent liability for the remainder.
• D) an offset to the accumulated depreciation reported on the balance sheet.

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Definitions:

Liability

Legal responsibility for one's actions or inactions, particularly in causing harm to others or to property, which may result in civil or criminal penalties.

UCC

Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.

Traveler's Check

A preprinted, fixed-amount check designed to allow the person signing it to make an unconditional payment to someone else as a result of the payee's acceptance.

Countersignature

An additional signature required on a document, serving as a verification or approval of the primary signature.