Which of the Following Statements Regarding Tax-Effect Accounting Is Incorrect

Multiple Choice

Which of the following statements regarding tax-effect accounting is incorrect?

A) The tax-effect method of accounting for income tax determines that temporary differences may arise, resulting in the recognition of either a liability or an asset.
B) The tax-effect method for calculating income tax expense is where the taxable income is multiplied by the tax rate.
C) A tax loss can only be carried forward as a future tax benefit if it is probable that the entity will earn taxable income in the future.
D) A deferred tax liability will occur where taxable income is less than accounting profit in the current period.