Question

multiple choice question which of the following is true related to deferred tax liabilities? multiple choice question. deferred tax liabilities arise when a company deducts costs in the tax return later than it recognizes them in the income statement. deferred tax liabilities help companies avoid paying taxes. deferred tax liabilities arise when tax laws permit a company to delay paying taxes on income until a later date. deferred tax liabilities arise from permanent differences between taxable income and financial reporting income.

Answer 1

Deferred tax liabilities arise when tax laws permit a company to delay paying taxes on income until a future date and are an accounting mechanism for discrepancies between financial statement income and taxable income.

Step-by-step explanation:

The question is related to deferred tax liabilities, which are a common aspect of corporate accounting and taxation. Deferred tax liabilities arise when there is a temporary difference between the income tax expense recognized in the financial statements and the tax paid to the tax authorities. Specifically, this occurs when a company recognizes an expense in its income statement before it is deductible for tax purposes or when it recognizes revenue later for tax purposes than for accounting purposes. This leads to the company paying less tax in the current period, resulting in a liability that represents taxes that will be paid in the future when those temporary differences reverse.

Among the multiple-choice options provided, the correct statement is that deferred tax liabilities arise when tax laws allow a company to delay paying taxes on income until a later date. It's important to note that deferred tax liabilities are not a method for companies to avoid paying taxes altogether; rather, they are an accounting mechanism to recognize the timing differences between book income and taxable income.