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

Question

Quizplus · Accepted Answer

The cash paid for income taxes would include both the prior year tax liability and the current year tax liability, which were paid amounts of $4,500 and $30,000 respectively. Therefore, the total cash paid would be $34,500 ($4,500 + $30,000). The fact that the company still owes $6,000 at the end of the year does not affect the cash paid during the year.

During the Current Year,a Company Paid $4,500 Which It Owed