Deferred taxes arise from timing differences between when the company reports taxes on its financial statements and makes tax payments. This means that the company may recognize certain expenses or revenue for accounting purposes in a different period than when they will be recognized for tax purposes, resulting in the need to defer or postpone the tax impact until a later period.

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Deferred Taxes

Question 7

Multiple Choice

Deferred taxes:

A) arise when financing costs are expensed immediately and are not capitalised.
B) arise from timing differences between when the company prepares taxes on its financial statements and makes tax payments.
C) refer to the reduction in corporate taxes as a result of taking an allowable deduction from the taxable income.
D) arise from timing differences between when the company reports taxes on its financial statements and makes tax payments.

Correct Answer: