Using different accounting methods on financial statements and tax returns will create:
A) No effect upon the statement of financial position, only the income statement.
B) No effect upon the statement of financial position nor the income statement.
C) A deferred tax liability.
D) An illegal situation.

Question

Quizplus · Accepted Answer

Using different accounting methods on financial statements and tax returns will create a deferred tax liability. This is because the financial statements and tax returns will show different amounts of income, which will result in deferred taxes that must be paid in the future. Therefore, it is important to use consistent accounting methods to avoid any potential issues with deferred taxes.

Using Different Accounting Methods on Financial Statements and Tax Returns