When preparing the operating activities section of the statement of cash flows using the indirect method,an increase in Income Taxes Payable is added to net income.

Question

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An increase in Income Taxes Payable indicates that more Income Tax Expense was accrued than paid.Consequently,when the indirect method is used,this difference (representing less cash paid)must be added to net income to calculate cash flows from operating activities.

When Preparing the Operating Activities Section of the Statement of Cash