On a statement of cash flows prepared using the direct method, cash paid for income taxes would be income tax expense minus
A)an increase in income taxes payable.
B)a decrease in income taxes payable.
C)beginning income taxes payable.
D)ending income taxes payable.
E)None of these answers is correct.

Question

Quizplus · Accepted Answer

The direct method calculates cash flows by adjusting each line item on the income statement for any changes in related balance sheet accounts. Therefore, to determine cash paid for income taxes, we need to take income tax expense and adjust it for any changes in income taxes payable from the beginning to the end of the period. If income taxes payable increases during the period, then cash paid for income taxes would be income tax expense minus the increase in income taxes payable.

On a Statement of Cash Flows Prepared Using the Direct