An extract from the trial balance of RRR Pty Ltd as at 30 June 2018 shows: Income tax expense $20,000
If the income tax provided for at the end 2017 was $12,000 and taxation is paid in arrears in a lump sum, what amount will appear in the statement of cash flows for taxation paid by RRR Pty Ltd for the year ended 30 June 2018?
A)$20,000.
B)$12,000.
C)$16,000.
D)Nil.

Question

Quizplus · Accepted Answer

The amount that will appear in the statement of cash flows for taxation paid by RRR Pty Ltd for the year ended 30 June 2018 is $12,000, because taxation is paid in arrears, meaning the tax expense recognized in the current year (2018) will be paid in the following year, and the payment made in the current year relates to the previous year's tax expense (2017).

An Extract from the Trial Balance of RRR Pty Ltd