A current tax liability is recognized for:
A) the current year's net loss.
B) the current year's net income.
C) estimated taxes payables for the current year.
D) estimated taxes payable for the previous year.

Question

Quizplus · Accepted Answer

A current tax liability is recognized for estimated taxes payables for the current year. This means the company estimates the amount of taxes they will owe for the current year and recognizes that liability. Options A and B are incorrect because net income or loss are used to calculate the amount of taxes owed, but they do not represent the actual taxes payable. Option D is incorrect because the liability for estimated taxes payable for the previous year should have already been recognized in that year's financial statements.

A Current Tax Liability Is Recognized For