Assume Tax Is Paid Annually in a Lump Sum

question 29

Multiple Choice

Assume tax is paid annually in a lump sum. The beginning balance in the current tax liability account is $52 000 and the ending balance is $73 000. There was no under or over provision of tax for the year. What is the amount of tax paid to be included in the statement of cash flows for the period?

• A) Nil
• B) $52 000
• C) $73 000
• D) $13 000

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Definitions:

Inputs

Resources used in the production process to produce goods or services.

Production

The process of creating goods or services using inputs such as labor, materials, and technology.

Spreading Effect

refers to the phenomenon where the impact of a particular event, policy, or action extends or disperses across a wider area or population.

Diminishing Returns

An axiom indicating that beyond a certain level, additional investments in a given domain will not yield proportionally higher returns unless other variables are adjusted.