When a Company Has a Credit Balance in Its Deferred

question 40

Multiple Choice

When a company has a credit balance in its Deferred Tax account,this amount would appear as a(n)

• A)contra asset on the balance sheet.
• B)stockholders' equity account on the balance sheet.
• C)expense account on the income statement.
• D)liability account on the balance sheet.

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Definitions:

Financial Reporting

Financial reporting involves the disclosure of financial results and related information by a company to its stakeholders, to help in making economic decisions.

Period Costs

Costs that are not directly tied to the production process and are expensed in the period they are incurred, such as sales, general, and administrative expenses.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.

Product Costs

Expenses directly associated with the creation of a product, including direct materials, direct labor, and manufacturing overhead.