Deferred Income Tax

Deferred Income Tax is an accounting concept which refers to any income which has been earned and accounted for, but has not yet had any tax paid on it. Therefore, this is a liability on the Balance Sheet as it is effectively a debt to the government. The usual reason for tax being deferred is because of different tax liabilities in terms of tax laws and accounting methods.

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

• Retained Earnings
• Fraud Triangle
• Accounts Receivable Turnover Ratio
• Marginal Cost Formula
• Nash Equilibrium