How to define which is taxable and which is pretax purposes, reporting, customers, liability, only

mfleming1983

I have a question from qbank, 7-11 Financial reporting and analysis.

Camphor Associates uses accrual basis for financial reporting purposes and cash basis for tax purposes.
Cash collections from customers is $238,000, and accrued revenue is only $188,000.
Assume expenses at 50% in both cases (i.e., $119,000 on cash basis and $94,000 on accrual basis), and a tax rate of 34%.
What is the deferred tax asset/liability in this case? A deferred tax:


A) asset of $48,960.

B) asset of $8,500.

C) liability of $8,500.

The ans from qbank:
Since taxable income ($119,000) exceeds pretax income ($94,000), Camphor will have a deferred tax asset of $8,500 = [($119,000 ? $94,000)(0.34)].


How do i define which is pretax and which is taxable income?
The way I approach this question is since the company has collect $119,000 cash and accrued revenue of $94,000 which they have not receive, the company will have to pay the tax for the $119,000 collected. Thats why i consider cash collections from customers as Pretax (which multiply by the tax rate to arrive at tax expense) and the accrued amount as the taxable.

Therefore my ans is C which is wrong according to qbank. Is my way of understanding this question wrong? Pls advise.

Thanks