Question

Orleans Co., a cash basis taxpayer prepares accrual basis financial statements. In its Year 2 balance...

Orleans Co., a cash basis taxpayer prepares accrual basis financial statements. In its Year 2 balance sheet, Orleans' deferred income tax liabilities increased compared to Year 1. Which of the following changes would cause this increase in deferred income tax liabilities?

I. An increase in prepaid insurance.

II. An increase in rent receivable.

III. An increase in warranty obligations.

a. I only

b. I and II

c. II and III

d. III only

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