Differences between financial accounting and tax accounting result in a company being permitted to defer paying some of its income tax expense,in which case it will report a deferred tax liability.

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Differences between financial accounting and tax accounting can result in differences in the timing and amounts of income recognized for financial reporting purposes and tax purposes. As a result, a company may be permitted to defer paying some of its income tax expense, which can result in the recognition of a deferred tax liability on its balance sheet. Therefore, the statement is true.

Differences Between Financial Accounting and Tax Accounting Result in a Company