Question

Entity A prepares its Statement of Cash Flows in accordance with US GAAP using the indirect...

Entity A prepares its Statement of Cash Flows in accordance with US GAAP using the indirect method. Indicate the reporting of the following transaction or event by major category: Taxes payable increased during the year

Cash Flows From Operating Activities–Add to Net Income

Cash Flows From Operating Activities–Deduct from Net Income

Cash Flows From Investing Activities

Cash Flows From Financing Activities

Non-cash

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Answer #1

Your required asnwer is option A i.e. Cash Flows From Operating Activities–Add to Net Income

Explanation:

Tax payable is current liability and therefore Increase in tax payable means increase in current liability and therefore it will be added in net income in cash flow from operating activities.


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