The Adjusting Entry to Record Income Taxes at the End

question 87

Multiple Choice

The adjusting entry to record income taxes at the end of an unprofitable accounting period consists of a:

• A) Debit to Income Tax Expense and a credit to Income Tax Payable.
• B) Credit to Income Tax Expense and a debit to Income Tax Payable.
• C) Credit to Income Tax Receivable and a debit to Income Tax Expense.
• D) No adjusting entry is required for income taxes if there are no profits.

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Definitions:

Net Present Value

A calculation that compares the present value of cash inflows to the present value of cash outflows over a period of time to assess the profitability of an investment.

Stock Repurchase Program

A plan initiated by a company to buy back its own shares from the marketplace, reducing the number of outstanding shares.

Special Dividend

A one-time, non-recurring dividend paid by a company to its shareholders, usually reflecting exceptionally good earnings.

2-for-1 Stock Split

A corporate action where a company divides its existing stock into two, reducing the price of each share for investors while maintaining the overall value of their investment.