Co. RZ has an Income Tax Provision of $10,000 for December. What is the right st

Question

Co. RZ has an Income Tax Provision of $10,000 for December. What is the right statement from the below?*

A. This is a Depreciation Expense of $10,000B. This is an Income Tax Liability of $10,000 DebitC. This is an Income Tax Expense of $9,000D. This is an Income Tax Liability of $10,000 Credit

12. How Co. XYZ books Corporate Income Tax Provision of $1,000?*

A. DR Cash $1,000 – CR Tax Liability $1,000B. DR Tax Liability $1,000 – CR Retained Earnings $1,000C. DR Tax Expense $1,000 – CR Tax Liability $1,000D. DR Tax Expense $1,000 – CR Account Receivables $1,000

13. Co. AB makes a taxable sale of $100k (gross income) in Timbuktu jurisdiction which VAT rate is set at 16%. What is the accounting entry for this transaction at time of billing?*

A. Dr. Cash; Cr. Input VAT; Cr. RevenueB. Dr. Accounts Payable; Cr. Revenue; Cr. Output VATC. Dr. Account Receivable R; Cr. RevenueD. Dr. Account Receivable; Cr. Output VAT; Cr. Revenue

Explanation / Answer

11.

This is an Income Tax Liability of $10,000 Credit

Income tax provision is a short term provision which will be there in Liabiity side of the balance sheet.

12.

C. DR Tax Expense $1,000 – CR Tax Liability $1,000

13

D. Dr. Account Receivable; Cr. Output VAT; Cr. Revenue

Description Debit $ Credit $ Tax expense           1,000 Tax liability           1,000 (Being income tax provision provided)

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