General Knowledge · Taxation

Consider the following statements regarding accounting and taxation: Statement 1: The primary objective of Deferred Tax accounting is to recognize the tax consequences of transactions in the same period as the transactions themselves, regardless of when the tax is paid. Statement 2: A Deferred Tax Asset is created when accounting depreciation is lower than tax depreciation, leading to higher tax payments in the current year. Statement 4: The Income Tax Act allows a bank to claim a deduction for the provision of bad debts up to 8.5% of total income and 10% of aggregate average advances made by rural branches. Identify which statement regarding Deferred Tax Assets is incorrect and which statement regarding bank deductions is correct.