An excess of income taxes expense over income taxes payable will result in recording a

Question

Quizplus · Accepted Answer

An excess of income taxes expense over income taxes payable means that the company has already recognized tax expenses in its income statement that exceed the actual tax payment due to timing differences. This results in a decrease in net income and a liability on the balance sheet called Deferred Income Taxes, which represents the amount of taxes that will be paid or refunded in future periods when the timing differences reverse. Therefore, the correct entry is to credit Deferred Income Taxes.

An Excess of Income Taxes Expense Over Income Taxes Payable