When Tax Rates Are Changed Subsequent to the Creation of a Deferred

question 130

Multiple Choice

When tax rates are changed subsequent to the creation of a deferred tax asset or liability, the FASB requires that:

• A)All deferred tax accounts be adjusted to reflect the new tax rates.
• B)The beginning deferred tax accounts are left unchanged.
• C)Only the current deferred tax accounts are adjusted to reflect the new tax rates.
• D)Only the noncurrent deferred tax accounts are adjusted to reflect the new tax rates.

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Definitions:

Retained Earnings

The portion of a company's profits that is kept or retained for reinvestment in the business, rather than being paid out as dividends.

Store Supplies

Items consumed in the daily operations of a retail business, not intended for sale to customers.

Adjustments Column

A column in accounting ledgers or spreadsheets used for recording adjustments to initial entries for correct financial representation.

Supplies Used

Items consumed during the normal course of business operations, recognized as an expense as they are used.