Asked by Maria Rodarte on Jun 30, 2024
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To determine cash payments for income taxes for the statement of cash flows using the direct method, an increase in income taxes payable is added to the income tax expense.
Direct Method
In accounting, the direct method is a way of reporting cash flows from operating activities by listing major categories of gross cash receipts and payments.
Income Taxes Payable
The amount of federal, state, or local taxes that a company is obligated to pay to the tax authorities, based on its earnings, within the current accounting period.
Income Tax Expense
The cost incurred by businesses or individuals due to income taxes.
- Understand the impact of variations in current assets and liabilities on the cash flows originating from operations.
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Learning Objectives
- Understand the impact of variations in current assets and liabilities on the cash flows originating from operations.
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