What Does the Tax Payment Appearing in the Statement of Cash

question 43

Multiple Choice

What does the tax payment appearing in the statement of cash flows of a company reflect?

• A)A prepayment for next year's tax liability
• B)Last year's tax liability (due to the lag in payment to tax office)
• C)This year's tax liability
• D)An estimate of this year's tax liability

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Definitions:

Allowance Method

The method of accounting for uncollectible accounts that provides an expense for uncollectible receivables in advance of their write-off.

Receivables

All money claims against other entities, including people, business firms, and other organizations.

Written Off

The process of recognizing that a portion of a company's assets or receivables has decreased in value and is unlikely to be recovered, thus removing it from the balance sheet.

Account Receivable

A claim against the customer created by selling merchandise or services on credit.