Indicate whether each of the following statements are True or False. Place a T or F on the answer sheet provided.

1. An error to ending inventory will counter balance over two years.
2. An error to beginning inventory will counter balance over two years.
3. Accrued rent expense was omitted from net income in Year 1 but was recorded as an expense in Year 2 when paid. This error will counter balance over two years.
4. Whether a company has permanent or temporary differences, tax expense and tax payable must always equal because debits must equal credits.
5. Deferred tax assets and deferred tax liabilities should not be netted on the balance sheet.
6. In a reversing year, tax expense is debited, tax payable is credited and DTL is credited.
7. Future taxable income will result in a DTL.
8. Future deductible income will result in a DTL.
9. An error discovered in a prior period’s income statement would require the company to issue a corrected income statement for the prior year.
10. A temporary difference will always reverse over a minimum of two years.

Answer rating: 100% (QA)

7 Future taxable income will result in a DTL True Deferred Tax Liability to be created if any liabil... View the full answer