During the year Income Tax Expense amounted to $30000 and Income Taxes Payable increased by $4000; therefore the cash paid for income taxes was $26000.

Question

Quizplus · Accepted Answer

Income Tax Expense represents the amount of income tax owed to the government based on the company's taxable income for the year. Income Taxes Payable is a liability account that represents the amount of income tax that the company owes to the government but has not yet paid. If Income Taxes Payable increased during the year, it means that the company owed more income tax at the end of the year than at the beginning of the year. The cash paid for income taxes would be equal to Income Tax Expense minus the increase in Income Taxes Payable, which is $30,000 - $4,000 = $26,000. Therefore, the statement is true.

During the Year Income Tax Expense Amounted to $30000 and Income