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:

Earned Income Tax Credit

A refundable tax credit for low- to moderate-income working individuals and families, designed to encourage and reward work.

Negative Income Tax

A tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes.

Government Intervention

Actions taken by government to influence or regulate economic activity, often to correct market failures and promote welfare.

Negative Income Tax

A system of income support that provides individuals with an income guarantee. If an individual's earnings fall below a certain level, they receive supplemental pay from the government rather than paying taxes.