Question

Provision for taxation is 1,00,000. The tax liability of the company is settled at 80,000 & it is paid immediately. Amount credited to capital reduction is
a) 80,000
b) 1,00,000
c) 20,000
d) 60,000​

Answer 1

Answer:

option B

Explanation:

1,00,000option B

Answer 2

c) 20,000

Taxation:

Taxation is the imposition of compulsory levies on individuals or entities by governments in almost every country of the world.

Tax liability is the payment owed by an individual, a business, or other entity to a federal, state, or local tax authority.

Here, given that,

Taxation = 1,00,000

Tax liability = 80,000

Now, the amount credited to the capital reduction = Taxation - Tax liability

∴ Amount credited to capital reduction = 1,00,000 - 80,000

Amount credited to capital reduction = 20,000