A net operating loss carryover that occurs in a company's second year of operations
A)May cause a company to report a tax benefit in the current period income statement.
B)Has no effect on income tax expense of the current period because no taxes are paid.
C)Causes a company to report a deferred income tax liability for taxes that are not paid currently.
D)Results in future taxable amounts.

Question

Quizplus · Accepted Answer

A net operating loss carryover can be used to offset taxable income in future periods, but it may also result in a tax benefit in the current period income statement. This is because accounting rules allow companies to recognize the tax benefit of a net operating loss carryover in the period in which it occurs, rather than waiting until it is actually used to offset taxable income.

A Net Operating Loss Carryover That Occurs in a Company's