CFA Practice Question

CFA Practice Question

Suppose for a firm Income Tax Expense is $8M and Taxes Payable is $6.5M then:
A. Credit Income Tax Expense for $8M and credit Income Tax Payable for $6.5M.
B. Credit Income Tax Expense for $8M and debit Income Tax Payable for $6.5M.
C. Debit Income Tax Expense for $8M and credit Income Tax Payable for $6.5M
Explanation: Expense should be a debit, and the Payable is a credit.

User Contributed Comments 2

User Comment
jjhigdon At the very beginning of the accounting section in the official CFA study materials, its says that the debt/credit convention will be ignored and you will not be tested on it.
akirchner1 That is true. Debits/Credits are optional reading.
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