Assume the direct method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Increase in Income Taxes Payable-indicate the effect on cash payments for income taxes by choosing one of the following:

Question

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An increase in Income Taxes Payable is an increase in the amount owed to the tax authorities for taxes that have been accrued but not yet paid. Therefore, it should be subtracted from Income Taxes to arrive at cash payments for income taxes.

Assume the Direct Method Is Used to Compute Net Cash