Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following is incorrect regarding the Income Tax Payable account?

The balance in this account decreases when taxes are paid to the government.

It is reported as an expense on the income statement.

It is classified as a current liability on the balance sheet.

It represents the amount of income tax owed to the government but not yet paid.

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Verified step by step guidance

Step 1: Understand the concept of the Income Tax Payable account. This account represents the amount of income tax owed to the government but not yet paid. It is a liability because it reflects an obligation to pay taxes in the future.

Step 2: Clarify the classification of the Income Tax Payable account. It is classified as a current liability on the balance sheet because it is expected to be settled within the next accounting period.

Step 3: Analyze the behavior of the account when taxes are paid. When taxes are paid to the government, the balance in the Income Tax Payable account decreases, as the liability is settled.

Step 4: Examine the reporting of income tax on the financial statements. Income tax expense is reported on the income statement, not the Income Tax Payable account. The Income Tax Payable account is reported on the balance sheet as a liability.

Step 5: Identify the incorrect statement. Based on the analysis, the incorrect statement is: 'It is reported as an expense on the income statement,' because the Income Tax Payable account is not an expense but a liability.