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Is the income tax expense shown in the income statement same as the income tax paid...

Is the income tax expense shown in the income statement same as the income tax paid shown in the cash flow statement? If not, why is the difference?

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Answer #1

The income tax expense is shown in the income statement is not same as the income tax paid shown in the cash flow statement because in the income statement or profit and loss statement, list income tax expenses as a result your business "should" pay based on its reported profit which will be different from its actual tax paid in the cash flow statement. The cash flow statement includes information on tax expenses which includes both long-term and short-term tax liabilities. When taxes are paid during the cash flow period reflected in the statement, then this change is shown as a decrease in taxes payable.

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