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. a. true b. false

Answer 1

B. False

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 not added back to net income. Instead, changes in income taxes payable are included as an adjustment to net income, under the operating activities section. An increase in income taxes payable indicates that less cash has been paid for taxes during the period, and therefore it is not added back to net income.