A decrease in deferred taxes (liability)would appear on the statement of cash flows,prepared using the indirect method as a(n)
A)addition to net income in the Operating Activities category.
B)deduction to net income in the Operating Activities category.
C)inflow of cash in the Financing Activities category.
D)outflow of cash in the Financing Activities category.

Question

Quizplus · Accepted Answer

A decrease in deferred tax liabilities indicates that the company has paid more taxes than it recognized as an expense, which is a use of cash. Therefore, it is deducted from net income in the Operating Activities section.

A Decrease in Deferred Taxes (Liability)would Appear on the Statement