Use the following information for questions.
Oswald Ltd.has recently decided to go public and has hired you as their independent accountant.They wish to adhere to IFRS and know that they must prepare a statement of cash flows.Their financial statements for 2017 and 2016 are provided below: The following additional data were provided for calendar 2017:
-On a statement of cash flows for calendar 2017, the cash paid for income taxes is
A)$17,000.
B)$12,000.
C)$7,000.
D)$5,000.

Question

Use the following information for questions.
Oswald Ltd.has recently decided to go public and has hired you as their independent accountant.They wish to adhere to IFRS and know that they must prepare a statement of cash flows.Their financial statements for 2017 and 2016 are provided below:  The following additional data were provided for calendar 2017:
-On a statement of cash flows for calendar 2017, the cash paid for income taxes is
A)$17,000. 
B)$12,000. 
C)$7,000. 
D)$5,000.

Quizplus · Accepted Answer

In order to calculate the cash paid for income taxes for 2017, we need to use the following formula: 
Income taxes paid = Income taxes expense + Increase in income tax payable - Decrease in income tax payable 
From the financial statements, we can see that income taxes expense for 2017 was $12,000, and the increase in income tax payable was $5,000 ($30,000 - $25,000). There was no decrease in income tax payable in 2017. 
Therefore, the cash paid for income taxes in 2017 was $17,000 ($12,000 + $5,000). 
Option A is the correct answer.

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