Which of the following statements does not correctly describe an adjustment to net income when determining cash flows from operating activities when using the indirect method?
A)An increase in wages payable will be added to net income.
B)A gain on the sale of a depreciable asset will be deducted from net income.
C)An increase in prepaid expenses will be deducted from net income.
D)An increase in income taxes payable will be deducted from net income.

Question

Quizplus · Accepted Answer

Under the indirect method, an increase in income taxes payable will be added to net income, because income tax expense was greater than the related cash payments.

Which of the Following Statements Does Not Correctly Describe an Adjustment