Question

Payment of Income Tax is shown as ______.

Options

• Operating Activity

• Investing Activity

• Financing Activity

• General Activity

Answer 1

Payment of Income Tax is shown as Operating Activity.

Explanation:

The payment of income tax is directly linked to the core revenue-producing operations and business profits of an enterprise. According to standard accounting rules, cash flows resulting from income taxes must always be classified under Operating Activities unless they can be explicitly connected to a specific financing or investing transaction.