- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 24. Income Taxes
- Subject 3. Determining the Tax Base of Assets and Liabilities
CFA Practice Question
Big Bucks has the following tax information for this year:
Taxes payable: $1,600
Income tax expense: $1,900
Income tax paid: $1,400
B. 30.2%
C. 35.8%
Pretax income: $5,300
Taxes payable: $1,600
Income tax expense: $1,900
Income tax paid: $1,400
The reported effective tax rate is ______.
A. 26.4%
B. 30.2%
C. 35.8%
Correct Answer: C
1900/5300
User Contributed Comments 4
| User | Comment |
|---|---|
| sarath | Pretax income and income tax expense used for financial reporting on Income statement... Taxable income , Taxes Payable , Income tax paid used for actual Income tax reporting. |
| wundac | Income tax expenses/pretax income=tax rate |
| alexsar75 | wouldn't the effective tax rate be the actual tax that was paid? |
| dbedford | Effective tax rate for you and I is what we paid in taxes. Effective tax rate for a corporation is Tax Expense / pre tax income |