CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Which of the following would result in expected reversals of timing differences not occurring?

I. A rise in price levels
II. A firm that has been growing
III. Changes in accounting methods
Correct Answer: I, II and III

Any of the these items can cause the deferred tax asset or liability (usually a liability) to continue to grow and not reverse. Larger differences are put into the account than are taken out, and the account thus continues to grow.

User Contributed Comments 3

User Comment
kalps a) Rise in price leves b) A firm that has been growing c) changes in accounting methods Can cause a deferred tax asset or liability to grow and not reverse. Larger differences are put into the account then taken out, and account thus continues to grow.
Masterkang Ay Ay Ay Kalps can summarize!
poomie83 I wouldnt call that a summary
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