thly issues, beginning in January 20Y6. In addition, the business had taxable income of $920,000 during the first calendar quarter of 20Y6. The federal tax rate is 30%. A quarterly tax payment will be made on April 12, 20Y6. Prepare the “Current liabilities” section of the balance shee

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A:

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.