Question

Shady Lane's income tax payable account decreased from $14 million to $12 million during 2016. If its income tax expense was $80 million, what was shown as an operating cash flow under the direct method?
A cash outflow of $12 million.
A cash outflow of $78 million.
A cash outflow of $80 million.
A cash outflow of $82 million.

Answer 1

Answer:

A cash outflow of $82 million.

Explanation:

Because during the year Shady had taxes expenses for $80 million but then Shady cancelled $2 million of the Income Tax Payable account, which decreased from $14 million to $12 million.