Statement I : Deferred Tax Liabilities (Net) is the amount of tax on the temporary difference between the accounting income and taxable income. It arises when the accounting income is more than the taxable income.
Statement II : Deferred Tax Liabilities (Net) and Deferred Tax Assets (Net) are only book entires i. e. they are neither actual liability nor actual asset.
In the light of the above statements, choose the correct answer from the options given below :
Correct Answer: (a) Both Statement I and Statement II are true
Solution:Both statement I and statement II are true.
Statement I :- Deferred Tax liability (Net) is the “P ; , amount of tax on the temporary difference between the accounting income and taxable income. It arises when the accounting income is more than the taxable income.
Statement II :- Deferred Tax liabilities (Net) and deferred Tax Assets (Net) are only book entries i.e. they are neither actual liability not actual asset.