Which of the Following Statements Is True with Respect to Adjusting

Multiple Choice

Which of the following statements is true with respect to adjusting the deferred tax account on consolidation?

A) Deferred taxes only need to be adjusted for unrealized profits in inventory at the end of the year.
B) Deferred taxes only need to be adjusted for unrealized profits in inventory at the beginning of the year.
C) Deferred taxes need to be adjusted for unrealized profits in inventory at both the beginning and the end of the year.
D) Deferred taxes do not need to be adjusted for unrealized profits.