- CFA Exams
- CFA Level I Exam
- Study Session 8. Financial Reporting and Analysis (3)
- Reading 27. Income Taxes
- Subject 5. Recognition and Measurement of Current and Deferred Tax
CFA Practice Question
When a deferred tax liability reverses, it leads to an increase in ______.
A. liabilities
B. cash outflow
C. net earnings and equity
Explanation: When a deferred tax liability reverses, the company pays out higher actual taxes than those reported in the income statement. This increases the cash outflow.
User Contributed Comments 3
| User | Comment |
|---|---|
| CoffeeGirl | when deferred tax liaiblity is reverse, then increase cash outflow when deferred tax liability, then decrease cash outflow. |
| Mago | i c |
| nmech1984 | R.E.V.E.R.S.E.S. How do I expect to pass without reading correctly..?! |