Tax Reports and Financial Reports in Merlenia | CFA Level 1 Exam Prep

Tax Reports and Financial Reports in Merlenia

Prev Question Next Question

Question

In the country of Merlenia, authorities require that tax reports and financial reports be identical. In Merlenia, there will be:

Answers

A. no recognition of deferred taxes.

B. a prevalence of LIFO accounting.

C. no advantage to capitalizing a lease.

D. no off-Balance-sheet financing.

Show Answer

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D.

Deferred taxes arise out of temporary differences between tax reports and financial statements. To account for such differences under accrual accounting, deferred tax assets or liabilities are generated in accordance with the Matching Principle.

Prev Question Next Question