Question

Most purchased book/tax differences are differences producing either deferred tax or deferred tax liabilities.

a) True
b) False

Answer 1

Most purchased book/tax differences do not produce deferred tax or deferred tax liabilities.

Step-by-step explanation:

False. Most purchased book/tax differences are not differences producing deferred tax or deferred tax liabilities. These differences are usually temporary in nature and do not result in a deferred tax impact. Examples of these differences include expenses that are deductible for financial accounting purposes but not for tax purposes, and revenue that is recognized for tax purposes but not for financial accounting purposes.