The accrual of wages expense for book purposes at year-end creates a deferred tax asset on the year-end balance sheet.

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The accrual of wages expense for book purposes at year-end creates a temporary difference between book and tax accounting, resulting in a deferred tax asset on the year-end balance sheet. This is because the expense will reduce taxable income in future years, resulting in lower tax obligations and creating a tax benefit for the company.

The Accrual of Wages Expense for Book Purposes at Year-End