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The balance sheet needs to show all claims that you have for you (assets) and against you (liabilities).

This is relevant to those who are going to use the financial statements to make a decision to invest in the company or loan money (extend credit) to the company.

2006-12-21 05:01:31 · answer #1 · answered by Jordan K 3 · 0 0

For the relection of the true state of affairs of an organisation there are prescribed Accounting Standards which require that certain information is disclosed in the financial statements for the users of these statements so as to help them take the right decisions when looking at the financial statements.
One such Accounting Standard requires that deferred tax liability or asset as the case may be is reflected in the accounts.

2006-12-22 23:40:58 · answer #2 · answered by Old M 1 · 0 0

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2016-12-18 17:14:32 · answer #3 · answered by Anonymous · 0 0

This is to reflect the value of claims on tax.

2006-12-21 05:16:55 · answer #4 · answered by cvrk3 4 · 0 0

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