When preparing the operating section of the statement of cash flows using the indirect method,an increase in income taxes payable is added back to net income.

Question

Quizplus · Accepted Answer

An increase in income taxes payable represents an amount that the company owes to the government but has not yet paid. Therefore, it is not a cash outflow and is added back to net income in the operating section of the statement of cash flows using the indirect method.

When Preparing the Operating Section of the Statement of Cash