Identify which of the following adjustments to after-tax operating income is used to approximate cash income.
A)expensing research and development costs
B)using LIFO valuation
C)deducting interest payable
D)using taxes paid rather than tax expense

Question

Quizplus · Accepted Answer

Using taxes paid rather than tax expense represents the actual amount of cash paid for taxes during the year and therefore is used to approximate cash income. The other options (expensing research and development costs, using LIFO valuation, deducting interest payable) do not directly affect cash flows and are not used to approximate cash income.

Identify Which of the Following Adjustments to After-Tax Operating Income