Future Income taxes are caused by which of the following?
A) Differences in IFRS and ITA rules pertaining to when revenue and expenses should be recognized.
B) Accounting errors.
C) The fact that the value of one country's currency relative to that of another can change over time.
D) A company's inability to pay income tax due in a particular tax year.

Question

Quizplus · Accepted Answer

Future income taxes arise due to differences in the timing of recognition of revenue and expenses between IFRS and ITA, which can lead to deferred tax liabilities or assets. Accounting errors may lead to adjustments in current or prior periods, but do not create future income taxes. Currency fluctuations may impact financial statements, but do not create future income taxes. Inability to pay income tax due in a particular year may lead to penalties or interest charges, but does not create future income taxes.

Future Income Taxes Are Caused by Which of the Following