In 2006, the Skeeter Corporation had deferred taxes of $348 on the liability side of its balance sheet. In 2007, the amount was $224. This means that Skeeter had a

Question

Quizplus · Accepted Answer

The decrease in deferred taxes from $348 to $224 means that Skeeter paid $124 ($348 - $224) towards its deferred tax liability. This represents a cash outflow for the company. Therefore, option B is the correct answer. The decrease in the deferred taxes liability from $348 to $224 means that Skeeter had a tax benefit which reduced their taxes payable by $124 ($348 - $224). Therefore, there was a cash outflow of $124 in 2007 to pay taxes, resulting in a decrease in the deferred taxes liability.

In 2006, the Skeeter Corporation Had Deferred Taxes of $348