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Basic Question 1 of 15

Big Bucks has the following tax information for this year:

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%

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
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I used your notes and passed ... highly recommended!


Learning Outcome Statements

explain how deferred tax liabilities and assets are created and the factors that determine how a company's deferred tax liabilities and assets should be treated for the purposes of financial analysis

CFA® 2024 Level I Curriculum, Volume 3, Module 9.