For each of the following characteristics, identify which of the three methods of accounting for income tax
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For each of the following characteristics, identify which of the three methods of accounting for income tax (taxes payable, deferral, or accrual) best matches that characteristic.
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Characteristic Closest to cash basis accounting Focuses on the balance sheet values of deferred tax Similar to direct write-off method for bad debts Focuses on the income statement tax expense Records an income tax expense adjustment when tax rates change Analogous to percentage of sales method for estimating bad debts Analogous to aging of accounts receivable approach for estimating bad debts Income tax asset and liability balances reflecting the prevailing tax rate Income tax expense for the period reflecting the prevailing tax rate Accounting method
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The closest to cash basis accounting for income taxes is the taxes payable method This method recogn...View the full answer
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