Which of the Following Statements Is True with Respect to Adjusting

question 1

Multiple Choice

Which of the following statements is true with respect to adjusting the deferred tax account on consolidation?

• A)Deferred taxes only need to be adjusted for unrealized profits in inventory at the end of the year.
• B)Deferred taxes only need to be adjusted for unrealized profits in inventory at the beginning of the year.
• C)Deferred taxes need to be adjusted for unrealized profits in inventory at both the beginning and the end of the year.
• D)Deferred taxes do not need to be adjusted for unrealized profits.

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Definitions:

Promissory Notes

Written, legally binding promises to pay a specified sum of money at a defined future date.

Installment Notes

A form of debt or loan that is paid back in regular, periodic installments, often including both principal and interest.

Principal

The original sum of money borrowed in a loan or invested, excluding any interest or dividends.

Debt-To-Equity Ratio

A metric revealing the comparative use of shareholders' equity and debt to finance a company's assets.