On December 31,2011,XYZ Inc

question 19

Multiple Choice

On December 31,2011,XYZ Inc.has an account payable of $2,000 for operating expenses incurred during the year.These expenses are only tax deductible when paid.XYZ normally pays for its operating expenses one month after they are incurred.Assuming a 20% tax rate,these expenses shall result in:

• A)a deferred tax asset of $400.
• B)a deferred tax liability of $400.
• C)a deferred tax asset of $2,000.
• D)a deferred tax liability of $2,000.