Circle the correct answer Deferred income taxes for a company will only result when (1 point) Taxable income is greater than accounting basis income as a result of a temporary timing difference Accounting basis income is greater than taxable income as a result of a permanent difference Carrying back a loss for 2 years to receive a refund for income taxes paid during the prior 2 years All of the above Circle the correct answer The total income tax provision on the regular income statement is always based on the applicable income tax rate and (1 point) The taxable income The difference between accounting basis income and taxable income The accounting basis income None of the above Circle the correct answer A balance sheet that contains a deferred tax asset may be a signal indicating (1 point) The companys income tax strategy is good Nothing at all The companys income tax strategy is suspect The companys accounting basis income is greater than its taxable income Circle the correct answer The income tax amount the company owes the IRS and the applicable state taxing agency is (1 point) The deferred income tax provision on the regular income statement and the current income tax liability on the balance sheet The current income tax provision on the regular income statement and the deferred income tax liability on the balance sheet The deferred asset on the balance sheet and the deferred income tax provision on the regular income statement The current income tax liability on the balance sheet and the current income tax provision on the regular income statement Circle the best answer Concerning deferred income taxes (1 point) A company prefers an increase in a deferred tax asset because it is a use of cash A company prefers an increase in a deferred tax liability because it is a source of cash A company has no preference between a deferred tax liability and a deferred tax asset Only results when accounting basis income is greater than taxable income Sanchez Co reported accounting basis income of $100,000 on its regular income statement which included a $30,000 warranty expense However, due to IRS regulations, Sanchez could only deduct $20,000 of the warranty expense on its income tax return (taxable income) The rest of the $10,000 will be deductible on Sanchezs income tax return next year Assuming a 20 tax rate, which of the following items would show up Sanchezs current year financial statements (3 points) A $20,000 total income tax provision on the regular income statement, a $16,000 current tax liability on the balance sheet and a $4,000 deferred tax liability on the balance sheet A $20,000 total income tax provision on the regular income statement, a $22,000 current tax liability on the balance sheet and a $2,000 deferred tax asset on the balance sheet A $22,000 total income tax provision on the regular income statement, a $20,000 current tax liability and $2,000 deferred liability on the balance sheet None of the above

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 11, 2024

Circle the correct answer. Deferred income taxes for a company will only result when: (1 point)
1. Taxable income is greater than accounting basis income as a result of a temporary timing difference.
2. Accounting basis income is greater than taxable income as a result of a permanent difference.
3. Carrying back a loss for 2 years to receive a refund for income taxes paid during the prior 2 years.
4. All of the above.

Circle the correct answer. The total income tax provision on the regular income statement is always based on the applicable income tax rate and: (1 point)
1. The taxable income.
2. The difference between accounting basis income and taxable income.
3. The accounting basis income.
4. None of the above.

Circle the correct answer. A balance sheet that contains a deferred tax asset may be a signal indicating: (1 point)
1. The companys income tax strategy is good.
2. Nothing at all.
3. The companys income tax strategy is suspect.
4. The companys accounting basis income is greater than its taxable income.

Circle the correct answer. The income tax amount the company owes the IRS and the applicable state taxing agency is: (1 point)
1. The deferred income tax provision on the regular income statement and the current income tax liability on the balance sheet.
2. The current income tax provision on the regular income statement and the deferred income tax liability on the balance sheet.
3. The deferred asset on the balance sheet and the deferred income tax provision on the regular income statement.
4. The current income tax liability on the balance sheet and the current income tax provision on the regular income statement.

Circle the best answer. Concerning deferred income taxes: (1 point)
1. A company prefers an increase in a deferred tax asset because it is a use of cash.
2. A company prefers an increase in a deferred tax liability because it is a source of cash.
3. A company has no preference between a deferred tax liability and a deferred tax asset.
4. Only results when accounting basis income is greater than taxable income.

Sanchez Co. reported accounting basis income of $100,000 on its regular income statement which included a $30,000 warranty expense. However, due to IRS regulations, Sanchez could only deduct $20,000 of the warranty expense on its income tax return (taxable income). The rest of the $10,000 will be deductible on Sanchezs income tax return next year. Assuming a 20% tax rate, which of the following items would show up Sanchezs current year financial statements? (3 points)
1. A $20,000 total income tax provision on the regular income statement, a $16,000 current tax liability on the balance sheet and a $4,000 deferred tax liability on the balance sheet.
2. A $20,000 total income tax provision on the regular income statement, a $22,000 current tax liability on the balance sheet and a $2,000 deferred tax asset on the balance sheet.
3. A $22,000 total income tax provision on the regular income statement, a $20,000 current tax liability and $2,000 deferred liability on the balance sheet.
4. None of the above.