Abstract: This paper studies the economic consequences of Accounting for Income Taxes from the view of accounting conservatism. We find that the liability method (asset/liability method) reduces accounting conservatism. Further study finds that majority of enterprises recognize deferred tax assets more than deferred tax liabilities which is the reason why some enterprises’s net income become positive from negative. This paper also studies the effect of tax rate change on accounting conservatism. We find that more tax burden enhances accounting conservatism. However, due to deferred tax assets will increase net income without increasing tax burden. The effect of deferred tax assets on accounting conservatism is negative correlated with tax burden.