Which of the Following Results in a Deferred Tax Asset

question 78

Multiple Choice

Which of the following results in a deferred tax asset?

• A) Revenue or gains are recognized earlier for book purposes than for tax purposes.
• B) Operating loss or tax credit carryforwards exist.
• C) Tax basis of an asset is less than its book.
• D) Expenses are deductible earlier for tax purposes than for book purposes.

---

Definitions:

GAAP

Generally Accepted Accounting Principles, a set of accounting standards, principles, and procedures that companies must follow when compiling their financial statements.

APB

The Accounting Principles Board, which was an organization that set standards for financial reporting and accounting in the past, succeeded by the FASB.

Effective Interest Method

A technique used in finance to calculate the actual interest rate on a bond or loan, considering compounding over the term.

Straight-Line Method

A method of calculating depreciation by evenly distributing the cost of an asset over its expected useful life.