Final answer:
Yes, it is true that when using the indirect method for the operating activities section of the statement of cash flows, an increase in Income Taxes Payable is added to net income to reflect the actual cash available.
Step-by-step explanation:
When preparing the operating activities section of the statement of cash flows using the indirect method, an increase in Income Taxes Payable is indeed added to net income. This is true because the indirect method starts with net income and then adjusts for changes in balance sheet accounts that affect cash. An increase in Income Taxes Payable represents taxes that are incurred but not yet paid, which means the company retained that cash. Therefore, it is necessary to add back this increase to net income in order to reflect the actual cash available from operations.