Which of the following formulas correctly shows how taxable income is calculated? O gross income less tax credits the sum of earned income and investment income O total income less tax deductions the sum of income from all sources

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.