All of the following statements are true EXCEPT:
A)deferred income taxes can be thought of as a liability.
B)deferred income taxes arise because firms are allowed to keep two sets of financial statements; one for shareholders and one for the IRS.
C)deferred income taxes arise because firms are allowed to keep two sets of financial statements; one for the shareholders and one for internal management.
D)deferred income taxes are also referred to as deferred tax liabilities.

Question

Quizplus · Accepted Answer

Deferred income taxes arise due to differences in the timing of income recognition between tax laws and accounting practices, not because firms keep separate financial statements for shareholders and internal management. The distinction is between financial accounting (for shareholders) and tax accounting (for the IRS), not between shareholders and internal management.

All of the Following Statements Are True EXCEPT