Imelda reports only half the cash from the vending machines on her cash flow statement and income tax returns.Her purpose in doing so is:
A)to reduce her income tax liability.
B)to increase her net income on the financial statement.
C)to retain the cash for reinvestment in the business.
D)to make the business more attractive to a buyer.

Question

Quizplus · Accepted Answer

Imelda's purpose in only reporting half the cash from the vending machines is to reduce her income tax liability. By reporting less income, she will owe less in taxes. However, this is a form of tax fraud and is illegal.

Imelda Reports Only Half the Cash from the Vending Machines