A GAAP financial statement includes footnotes that:
A) Give estimates of the dates on which the deferred tax liability will be paid.
B) Show the journal entries to determine the deferred income tax expense.
C) Break down the state-by-state profitability of the entity.
D) Include a reconciliation of the book effective tax rate with the applicable statutory tax rate.

Question

Quizplus · Accepted Answer

Footnotes in GAAP financial statements often include a reconciliation of the book effective tax rate with the applicable statutory tax rate to provide transparency and understanding of the differences between these rates. This helps users of the financial statements understand how the company's financial activities and tax strategies impact its tax expense and liabilities.

A GAAP Financial Statement Includes Footnotes That