In 2011, a company paid $4,500 which it owed from its 2010 income tax liability and $30,000 for its 2011 tax liability. The company still owes $6,000 at year-end. How much should the company report as cash paid for income taxes on its 2011 statement of cash flows, using the direct method?
A) $34,500
B) $40,500
C) $30,000
D) $3,500

Question

Quizplus · Accepted Answer

The company should report $34,500 as cash paid for income taxes on its 2011 statement of cash flows. This includes the $4,500 paid for the 2010 tax liability and the $30,000 paid for the 2011 tax liability.

In 2011, a Company Paid $4,500 Which It Owed from Its