The assumption made for the tax effect method of accounting for a company's income tax is:

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Quizplus · Accepted Answer

The tax effect method assumes that the income tax expense is not equal to the current tax liability because of the differences between financial accounting and tax accounting standards. This method accounts for the timing differences between when income and expenses are recognized for financial accounting purposes versus for tax accounting purposes. Therefore, the income tax expense and the current tax liability may be different. The other options mentioned are incorrect assumptions.

The Assumption Made for the Tax Effect Method of Accounting