Question

hen preparing the operating activities section of the statement of cash flows using the indirect method, an increase in income taxes payable is added back to net income. question 28 options: true

Answer 1

I believe it is true. I think this because an increase in income taxes payable means that the business has recorded an expense for taxes but has not yet paid them in cash. By adding back the increase in income taxes payable to net income, the statement of cash flows reflects the actual cash flow generated by the business's operations. An increase in income taxes payable represents a use of cash that is not reflected in the net income.

(Or it will just be added back)

If you don’t understand that, basically it is true that an increase in income taxes payable is added back to income. This is because it doesn’t reflect towards it.

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Please remember to revise this and make it in your own words if you want! I hope this helps you. -Doodle

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Answer 2

True.

When preparing the operating activities section of the statement of cash flows using the indirect method, an increase in income taxes payable is added back to net income. This is because an increase in income taxes payable represents a use of cash that is not reflected in the net income.