Which of the following statements regarding temporary differences is false?
A)Temporary differences can result in deferred liabilities and deferred assets.
B)Deferred tax liabilities are found on the balance sheets of nearly every company.
C)For most companies,the primary source of deferred taxes is timing differences related to depreciation.
D)The deferred tax liability equals the temporary difference times the tax rate.
E)Temporary differences result in the cancellation of taxes.

Question

Quizplus · Accepted Answer

Temporary differences do not result in the cancellation of taxes, rather they can create timing differences in recognizing income or expenses for tax purposes versus financial reporting purposes. This can result in deferred tax liabilities or deferred tax assets, but not the cancellation of taxes.

Which of the Following Statements Regarding Temporary Differences Is False