CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Which of the following statements regarding deferred taxes is CORRECT?
A. A deferred tax asset is created when reported pre-tax income is lower than taxable income.
B. A deferred tax liability is created when taxes payable exceed income tax expense.
C. A deferred tax asset is created when the income tax expense exceeds taxes payable.
Explanation: A deferred tax asset is created when the tax paid or payable is greater than the reported income tax expense. This will be the case when taxable income exceeds reported pre-tax income.

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