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Depreciation interview questions and answers

Topics
 General Accounting
 Accounting Type
 Journal
 Expenditure
 Ledger
 Depreciation
 Bank Reconciliation
 Balance Sheet
 Profit and Loss
 Financial Accounting
 Rectification of Errors
 Cost Accountancy
 Cost Element
 Labour Cost
 Material Cost
 Overhead Cost
 Marginal Costing
 Standard Costing
 Uniform Costing
 Budgetary Control
 Home >> MBA finance

What is depreciation? What are the causes of depreciation? Is it a cost? Why?


Depreciation is a permanent, gradual and continuous reduction in the book value of the
fixed asset. causes of Depreciation….
What is the need of depreciation account?
According to the matching principle of accounting, the costs incurred in the accounting year
should be matched with the revenue…
What is the effect of depreciation of assets on profits received by owners?
Depreciation forms a part of cost which is used for arriving at correct estimation of profits,
which then is distributed to the owners…
List various methods for calculating depreciation.
Methods for calculating depreciation are: Straight Line Method….
Explain straight line method to calculate depreciation.
It is the simplest and most often used technique. The components used to calculate
Straight Line Method are:…
Explain Written Down Value (Reducing Balance) method to calculate depreciation
In Written Down Value Method, the rate of depreciation is predetermined. This is done by
deducting the amount of depreciation charged before….Formula to calculate:…
Explain production unit method to calculate depreciation
Production Unit Method is also a method of calculating depreciation. According to this
method...Formula to calculate..
Explain annuity method of calculating depreciation
In this method, the purchase of an asset is considered an investment of capital on which a
certain rate of interest is earned…
What is sinking fund method of calculating depreciation?
It is also known as Depreciation fund method. Under this method a sinking fund or
depreciation fund is created…
Explain revaluation method to calculate depreciation
Under this method the fixed assets are valued at the end of each accounting period. The
difference between….Formula for Calculating…
What method of depreciation calculation is used to calculate the tax liability
according to Income Tax Act, 1961?
Depreciation calculation mehtod used to calculate the tax liability…
How is depreciation calculated as per schedule XIV of Companies Act, 1956?
As per Schedule XIV of Companies Act, 1956 the company can calculate the
depreciation…
How are the fixed assets categorized to calculate the depreciation as per schedule
XIV of Companies Act, 1956?
To calculate depreciation as per Schedule XIV of Companies Act, 1956 the fixed assets are
categorized as below:…
Compare: Depreciation as per Companies Act and Income Tax Act
Under the Companies Act: Depreciation is computed either using the straight line method
or written down value method…
General accounting interview questions
Topics
 General Accounting
 Accounting Type
 Journal
 Expenditure
 Ledger
 Depreciation
 Bank Reconciliation
 Balance Sheet
 Profit and Loss
 Financial Accounting
 Rectification of Errors
 Cost Accountancy
 Cost Element
 Labour Cost
 Material Cost
 Overhead Cost
 Marginal Costing
 Standard Costing
 Uniform Costing
 Budgetary Control
 Home >> MBA finance

What are the various streams of accounting?


Streams of accounting: Financial Accounting, Cost Accounting, Management Accounting.
Management Accounting: is the process of analysis, interpretation and presentation of
accounting.....
Financial Accounting and its characteristic features
Financial Accounting is the process in which business transactions are recorded
systematically in the various......characteristics features of Financial Accounting...
Explain Cost Accounting. What are the objectives of doing it?
Cost Accounting is the process of classifying and recording of expenditure incurred during
the operations of the organization in a systematic way.....
Define Management Accounting. What are its objectives?
Management Accounting is the process of analysis, interpretation and presentation of
accounting information collected with the help of financial accounting
What is the scope of Management accounting?
Scope of Management Accounting - 1) Financial Accounting 2) Cost Accounting 3)
Revaluation accounting 4) Control Accounting 5) Marginal Costing ......
Compare Financial Accounting and Cost Accounting.
Financial Accounting protects the interests of the outsiders dealing with the organization
e.g shareholders, creditors etc.....
Financial Accounting vs. Management Accounting
Financial Accounting reports are used by outside parties such as creditors, shareholders,
tax authorities etc. whereas Management Accounting reports are used by managers////
Compare Cost Accounting and Management Accounting
The scope of management accounting is broader than that of cost accounting...In Cost
accounting, the main emphasis is on cost ascertainment and cost control....
Bank reconciliation interview questions and answers

Home >> MBA finance

Explain Bank Reconciliation Statement. Why is it prepared?


Bank Reconciliation Statement is a statement prepared to reconcile the balances of cash
book maintained…
What are the reasons which cause pass book of the bank and your bank book not
tally?
Bank charges, Amount collected by bank on standing instructions of the concern, Direct
payment by customers into the bank account etc.
What are the important things to be remembered while preparing a bank
reconciliation statement?
While preparing a bank reconciliation statement following important points need to be
remembered:
Marginal costing interview questions and answers
Topics
 General Accounting
 Accounting Type
 Journal
 Expenditure
 Ledger
 Depreciation
 Bank Reconciliation
 Balance Sheet
 Profit and Loss
 Financial Accounting
 Rectification of Errors
 Cost Accountancy
 Cost Element
 Labour Cost
 Material Cost
 Overhead Cost
 Marginal Costing
 Standard Costing
 Uniform Costing
 Budgetary Control
 Home >> MBA finance

What is Marginal Costing? What are its features?


Marginal Costing is ascertainment of the marginal cost which varies directly with the
volume of production by differentiating between fixed…
How is the concept of marginal costing practically applied?
Evaluation of Performance, Profit Planning,Fixation of Selling Price,Make or Buy
decision,Optimizing Product Mix,Cost Control,Flexible Budget preparation…
What are the limitations of Marginal Costing?
The limitations of Marginal Costing: - The classification of total costs into fixed and variable
cost is difficult….
What is Cost Volume-Profit relationship?
Cost Volume-Profit (CVP) relationship is an analysis which studies the relationships
between the following factors and its impact on the amount of profits….
Explain P/V ratio and Contribution.
P/V Ratio: P/V Ratio (Profit Volume Ratio) is the ratio of contribution to sales which
indicates the contribution earned with respect to one rupee of sales…
Explain Break Even Point. How does BEP help in making business decision?
Break Even Point (BEP) is a volume of sales where there is neither loss nor profit. That
means contribution is enough to cover the fixed costs…
Explain Margin of Safety.
Margin of Safety is the amount of sales which generates profit. In other words, sales
beyond Break Even Point are known as Margin of Safety….

Budgetary control interview and questions


Topics
 General Accounting
 Accounting Type
 Journal
 Expenditure
 Ledger
 Depreciation
 Bank Reconciliation
 Balance Sheet
 Profit and Loss
 Financial Accounting
 Rectification of Errors
 Cost Accountancy
 Cost Element
 Labour Cost
 Material Cost
 Overhead Cost
 Marginal Costing
 Standard Costing
 Uniform Costing
 Budgetary Control
 Home >> MBA finance

What is Budget? What are its characteristics?


A budget is a financial document or an action plan which is prepared and used to
project...Following are the characteristics of a good budget…
What is Budgetary Control? What are its characteristics?
Budgetary Control is a methodical control technique whereby budgets are prepared relating
the responsibilities of budget holders….
What are the advantages of Budgetary Control?
Advantages of Budgetary Control - It is a powerful tool for the purpose of cost control and
profit maximization…
What are the pre-requisites to implement Budgetary Control?
First a Budget Centre which is that section of the organisation for which the budget will be
prepared should be clearly defined…
What are the major categories under which budgets are divided?
Sales/Marketing Budget, Production Budget, Finance Cash budget, Personnel budget…
Explain sales budget? What factors are taken into consideration while preparing it?
Following factors are taken into consideration while forecasting for sales
quantity...Following factors are taken into account while forecasting for selling price..
What is a production budget? Why is it prepared?
Production budget is a forecast of production for the budget period. It is prepared from two
angles: I…
What is a purchase budget? What things are considered before preparing it?
Purchase budget is a forecast of quantity and value of materials required to purchase
during the budget period.
What is a cash budget? What are the different methods to prepare it?
Cash budget is the budget which is prepared under the finance budget. It is an estimation
of the expected cash receipts…
Compare fixed and flexible budgets.
A fixed budget is established for a specific level of activity whereas flexible budget is
prepared for various levels of activity….
Explain Budget Manual. Principles and objectives of the budgetary control
Budget Manual is a document which standardized methods and procedures required in
relation to budgetary control….
What role does budgetary control play in cost control? What are the requirements
for its successful implementation?
Budgetary Control is establishment of budgets and the continuous comparison of actual
results with the planned results….

Uniform costing interview questions


Topics
 General Accounting
 Accounting Type
 Journal
 Expenditure
 Ledger
 Depreciation
 Bank Reconciliation
 Balance Sheet
 Profit and Loss
 Financial Accounting
 Rectification of Errors
 Cost Accountancy
 Cost Element
 Labour Cost
 Material Cost
 Overhead Cost
 Marginal Costing
 Standard Costing
 Uniform Costing
 Budgetary Control
 Home >> MBA finance

What is uniform costing? What is the scope of uniform costing?


Uniform costing is the application of the same accounting and costing principles, methods
or procedures uniformly by various undertakings…
Why is uniform costing implemented?
Uniform costing method is implemented due to the following advantages:…
What are the pre-requisites for successful implementation of uniform costing?
The pre-requisites for successful implementation of uniform costing are as follows:..
Are there any disadvantages of implementing Uniform Costing? If yes, what?
Yes, there are few disadvantages of implementing Uniform Costing. Following are the main
disadvantages: …
What are the areas where uniform costing can be implemented?
The following are the areas where uniform costing can be implemented: In method of
pricing the issues…
Explain uniform cost manual. What are its various contents?
Uniform cost manual is a document which lays down the general accounting principles,
methods and …
30 MBA Finance Questions and Answers:
1 :: What are the various streams of accounting?
There are three streams of accounting:

1) Financial Accounting: is the process in which business transactions are recorded


systematically in the various books of accounts maintained by the organization in order to
prepare financial statements. Theses financial statements are basically of two types: First is
Profitability Statement or Profit and Loss Account and second is Balance Sheet.

2) Cost Accounting: is the process of classifying and recording of expenditure incurred


during the operations of the organization in a systematic way, in order to ascertain the cost
of a cost center with the intention to control the cost.

3) Management Accounting: is the process of analysis, interpretation and presentation of


accounting information collected with the help of financial accounting and cost accounting,
in order to assist management in the process of decision making, creation of policy and day
to day operation of an organization. Thus, it is clear from the above that the management
accounting is based on financial accounting and cost accounting.

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2 :: Explain Financial Accounting. What are its characteristic features?


Financial Accounting is the process in which business transactions are recorded
systematically in the various books of accounts maintained by the organization in order to
prepare financial statements. These financial statements are basically of two types: First is
Profitability Statement or Profit and Loss Account and second is Balance Sheet.

Following are the characteristics features of Financial Accounting:


1) Monetary Transactions: In financial accounting only transactions in monetary terms are
considered. Transactions not expressed in monetary terms do not find any place in financial
accounting, howsoever important they may be from business point of view.
2) Historical Nature: Financial accounting considers only those transactions which are of
historical nature i.e the transaction which have already taken place. No futuristic
transactions find any place in financial accounting, howsoever important they may be from
business point of view.
3) Legal Requirement: Financial accounting is a legal requirement. It is necessary to
maintain the financial accounting and prepare financial statements there from. It is also
obligatory to get these financial statements audited.
4) External Use: Financial accounting is for those people who are not part of decision
making process regarding the organization like investors, customers, suppliers, financial
institutions etc. Thus, it is for external use.
5) Disclosure of Financial Status: It discloses the financial status and financial performance
of the business as a whole.
6) Interim Reports: Financial statements which are based on financial accounting are
interim reports and cannot be the final ones.
7) Financial Accounting Process: The process of financial accounting gets affected due to
the different accounting policies followed by the accountants. These accounting policies
differ mainly in two areas: Valuation of inventory and Calculation of depreciation.

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3 :: Explain Cost Accounting. What are the objectives of doing it?
Cost Accounting is the process of classifying and recording of expenditure incurred during
the operations of the organization in a systematic way, in order to ascertain the cost of a
cost center with the intention to control the cost.

Following are the basic three objectives of Cost Accounting:

1) Ascertainment of Cost and Profitability


2) Cost Control
3) Presentation of information for managerial decision making.

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4 :: What are the characteristic features of cost accounting?


Following are the characteristic features of Cost Accounting:

1) Cost accounting views the whole organization from the individual component of the
organization like a job, a process etc.
2) Cost accounting aims at ascertaining the profitability of individual components of the
organization.
3) It is meant for those people who are part of the decision making process of the
organization. Thus, it is only for internal use.
4) It is not a legal requirement. It is not compulsory to maintain cost accounting records.
5) In Cost Accounting, data is immediately available which facilitates in decision making
process.
6) Cost Accounting considers each and every transaction, whether related to past or future
which will have an impact on the business.

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5 :: Define Management Accounting. What are its objectives?


Management Accounting is the process of analysis, interpretation and presentation of
accounting information collected with the help of financial accounting and cost accounting,
in order to assist management in the process of decision making, creation of policy and day
to day operation of an organization. Thus, it is clear from the above that the management
accounting is based on financial accounting and cost accounting.

Following are the objectives of Management Accounting:

1) Measuring performance: Management accounting measures two types of performance.


First is employee performance and the second is efficiency measurement. The actual
performance is measured with the standardized performance and a report of deviation from
the standard performance is reported to the management for the effective decision making
and also to indicate the effectiveness of the methods in use. Both types of performance
management are used to make corrective actions in order to improve performance.

2) Assess Risk: The aim of management accounting is to assess risk in order to maximize
risk.

3) Allocation of Resources: is an important objective of Management Accounting.

4) Presentation of various financial statements to the Management.

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6 :: What are the limitations of Management Accounting?
Limitations of Management Accounting:

1) Management Accounting is based on financial and cost accounting, in which historical


data is used to make future decisions. Thus, strength and weakness of the managerial
decisions are based on the strength and weakness of the accounting records.

2) Management Accounting is useful only to those people who are in the decision making
process.

3) Tools and techniques used in management accounting only provide information and not
ready made decision. Thus, it is only a supplementary service.

4) In Management Accounting, decision is based on the manager’s institution as


management try to avoid lengthy courses of scientific decision making.

5) Personal prejudices and bias affect the decisions as the interpretation of financial
information is based on personal judgment of the interpreter.

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7 :: What are the various techniques used to discharge the function of management
accounting?
Following are the technique used to discharge the function of management accounting:
1) Marginal Costing
2) Budgetary Control
3) Standard Costing
4) Uniform Costing

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8 :: What is the scope of Management accounting?


Following is the scope of Management Accounting:

1) Financial Accounting
2) Cost Accounting
3) Revaluation accounting
4) Control Accounting
5) Marginal Costing
6) Budgetary Control
7) Financial Planning and
8) Break Even Analysis
9) Decision accounting:
10) Reporting
11) Taxation
12) Audit

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9 :: Compare Financial Accounting and Cost Accounting?


1) Financial Accounting protects the interests of the outsiders dealing with the organization
e.g shareholders, creditors etc. Whereas reports of Cost Accounting is used for the internal
purpose by the management to enable the same in discharging various functions in a
proper manner.

2) Maintenance of Financial Accounting records and preparation of financial statements is a


legal requirement whereas Cost Accounting is not a legal requirement.

3) Financial Accounting is concerned about the calculation of profits and state of affairs of
the organization as whole whereas Cost accounting deals in cost ascertainment and
calculation of profitability of the individual products, departments etc.

4) Financial Accounting considers only transactions of historical financial nature whereas


Cost Accounting considers not only historical data but also future events.

5) Financial Accounting reports are prepared in the standard formats in accordance with
GAAP whereas Cost accounting information is reported in whatever form management
wants

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10 :: Compare Financial Accounting and Management Accounting?
1) Financial Accounting reports are used by outside parties such as creditors, shareholders,
tax authorities etc. whereas Management Accounting reports are used by managers inside
the organization for planning, directing, controlling and taking decisions.

2) In Financial Accounting, only historical financial transactions are considered and do not
consider non financial transactions whereas in Managerial Accounting emphasis is on
decisions affecting the future, thus it may consider future data as well s non financial
factors.

3) Maintenance of financial accounting records and preparation of financial statements is a


legal requirement whereas Management Accounting is not at all legal requirement.
Moreover, these systems have their own reporting formats.

4) In Financial Accounting, precision of information is required whereas in Management


Accounting timeliness of information is required.

5) In Financial Accounting, only summarized data is prepared for the entire organization
whereas in Management Accounting detailed reports are prepared about products,
departments, employees and customer.

6) Preparation of Financial Accounting is based of Generally Accepted Accounting


Principles whereas Management Accounting does not follow such principles to prepare
reports.

7) Financial reports generated by the Financial Accounting are required to be accurate


whereas accuracy is not the prerequisite of management accounting.

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11 :: Compare Cost Accounting and Management Accounting?


1) The scope of management accounting is broader than that of cost accounting.

2) Both the accounting streams are not a legal requirement.

3) Cost accounting provides only cost information for managerial use whereas management
accounting provides all types of accounting information i.e., cost accounting as well as
financial accounting information.

4) In Cost accounting, the main emphasis is on cost ascertainment and cost control
whereas in management accounting the main emphasis is on decision-making.

5) The various techniques used by cost accounting are standard costing, budgetary control,
marginal costing and cost-volume-profit analysis, uniform costing and inter-firm comparison,
etc. whereas management accounting also uses these techniques but also uses techniques
like ratio analysis, funds flow statement, statistical analysis etc.

6) Cost Accounting is a part of Management Accounting whereas Management accounting


is an extension of managerial aspects of cost accounting with the ultimate intention to
protect the interests of the business.

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12 :: MBA Finance General accounting interview questions:


☛ What are the various streams of accounting? 
☛ Explain Financial Accounting. What are its characteristic features?
☛ Compare Financial Accounting and Management Accounting?
☛ Compare Cost Accounting and Management Accounting?

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13 :: MBA Finance Basic financial management interview questions:


☛ What is the scope of finance function? 
☛ What are the goals of finance function? 
☛ What is the relation of finance function to other functions of a business enterprise?

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14 :: MBA Finance Basics financial accounting interview questions:


Explain the following: 
★ Business Entity Concept 
★ Dual Aspect Concept 
★ Going Concern Concept 
★ Accounting Period Concept 
★ Cost Concept 
★ Money Measurement Concept 
★ Marketing Concept

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15 :: MBA Finance Expenditures interview questions:


☆ What are capital expenditures? 
☆ Is it Ok to consider these expenditures while calculating the profitability of during a
certain period? Explain your answer.
☆ Explain deferred expenditures. How are these expenses dealt with in profitability
statement?

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16 :: MBA Finance Types of Accounts interview questions:


☆ Explain Real Accounts. 
☆ List different accounts consisting real accounts in practical circumstances

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17 :: MBA Finance Double entry system of accounting interview questions:


✰ What is the principal of Double Entry system of accounting? 
✰ What are the advantages of Double Entry system of accounting?

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18 :: MBA Finance Depreciation interview questions:


★ What is depreciation? 
★ What are the causes of depreciation? Is it a cost? Why?
★ What is the need of depreciation account?
★ What is the effect of depreciation of assets on profits received by owners?
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19 :: MBA Finance Balance sheet interview questions:


How would you deal with following while preparing final accounts:
☼ Closing Stock 
☼ Depreciation 
☼ Outstanding Expenses 
☼ Prepaid Expenses 
☼ Accrued Income 
☼ Income received in advance 
☼ Bad debts 
☼ Provision for doubtful debts 
☼ Provision for discount on Debtors 
☼ Interest on Capital 
☼ Drawings 
☼ Deferred revenue expenditure written off 
☼ Abnormal Loss 
☼ Goods distributed as free samples 
☼ Goods sent on approval basis 
☼ Commission payable to the manager

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20 :: MBA Finance Bank reconciliation statement interview questions:


★ Explain Bank Reconciliation Statement. Why is it prepared?
★ What are the reasons which cause pass book of the bank and your bank book not tally?.

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21 :: MBA Finance Capital market interview questions:


❀ What does capital market mean? 
❀ How does the company raise funds in capital market?
❀ What "rights issue" do the shareholders of a company have under Companies Act?
❀ What are the eligibility criteria for an unlisted company to make public issue?
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22 :: Why you choose MBA?


The answer for this question may vary depending on your background. If you are a fresher
finishing your bachelor degree, just say that an MBA would be the right option into the
corporate world.
If you are someone having some work experience, then probably you may have different
reasons to tell to them. For example you may choose to study the MBA program to switch
industries or could be looking for more responsibilities in the same industry.

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23 :: What you have learnt from your failures?


I have learnt to analyze myself and find out my shortcomings. I have take those
shortcomings seriously to improve myself in the future. You can even say I have learned to
never give up, never to feel rejected etc.

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24 :: Can you walk me through a cash flow statement?


Start with net income, go line by line through major adjustments (depreciation, changes in
working capital and deferred taxes) to arrive at cash flows from operating activities.
Mention capital expenditures, asset sales, purchase of intangible assets, and purchase/sale
of investment securities to arrive at cash flow from investing activities.
Mention repurchase/issuance of debt and equity and paying out dividends to arrive at cash
flow from financing activities.
Adding cash flows from operations, cash flows from investments, and cash flows from
financing gets you to total change of cash.
Beginning-of-period cash balance plus change in cash allows you to arrive at end-of-period
cash balance.

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25 :: Is it possible for a company to show positive cash flows but be in grave trouble?
Absolutely. Two examples involve unsustainable improvements in working capital (a
company is selling off inventory and delaying payables), and another example involves lack
of revenues going forward.in the pipeline.

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26 :: How is it possible for a company to show positive net income but go bankrupt?
Two examples include deterioration of working capital (i.e. increasing accounts receivable,
lowering accounts payable), and financial shenanigans.

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27 :: Why are increases in accounts receivable a cash reduction on the cash flow statement?
Since our cash flow statement starts with net income, an increase in accounts receivable is
an adjustment to net income to reflect the fact that the company never actually received
those funds.

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28 :: How is the income statement linked to the balance sheet?


Net income flows into retained earnings.

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29 :: What is a deferred tax liability and why might one be created?
Deferred tax liability is a tax expense amount reported on a company's income statement
that is not actually paid to the IRS in that time period, but is expected to be paid in the
future. It arises because when a company actually pays less in taxes to the IRS than they
show as an expense on their income statement in a reporting period.
Differences in depreciation expense between book reporting (GAAP) and IRS reporting can
lead to differences in income between the two, which ultimately leads to differences in tax
expense reported in the financial statements and taxes payable to the IRS.
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30 :: What is a deferred tax asset and why might one be created?
Deferred tax asset arises when a company actually pays more in taxes to the IRS than they
show as an expense on their income statement in a reporting period.

Differences in revenue recognition, expense recognition (such as warranty expense), and


net operating losses (NOLs) can create deferred tax assets.

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