Under SFAS 109 When a Company Has a Net Operating

question 51

Multiple Choice

Under SFAS 109 when a company has a net operating loss carryforward:

• A)A deferred tax liability is recognized.
• B)A receivable is created.
• C)A deferred tax equity account is created.
• D)A deferred tax asset is recorded along with any applicable valuation allowance.

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Definitions:

Full Employment

A condition in the economy where all potential labor forces are utilized in the most economically effective manner.

Market Economy

An economic system where decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.

Aggregate Demand

The sum total of all economic needs for goods and services, appraised at a constant overall price level in a stated period.

Excess Capacity

A situation where a company or economy can produce more goods or services than currently demanded, leading to unused resources or capacity.