Deferred taxes are not taxes that never need to be paid due to a credit, a current liability account, or taxes that must be paid within the next month. They are accounting measures used to reconcile differences between tax law and accounting practices by recognizing the tax effect of timing differences between book and tax income.

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Deferred Taxes Are

Question 39

Multiple Choice

Deferred taxes are

A) taxes that need never be paid due to a credit received from the federal government.
B) a current liability account.
C) taxes that must be paid within the next month.
D) none of the above.

Correct Answer: