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Hi,
while watching your lecture on the consolidated statement of cash flows, it came to my attention that you entered the b/f figures for tax on the credit side and the c/f figure for tax on the debit side.
This caused a bit of confusion as tax is an expense, therefore an increase to tax would be a debit and a decrease a credit.
Please can you get back to me regarding this issue I have.
Hi,
You’re correct that the tax is an expense, but the T-account used it the tax payable account, so the liability on the SFP. As this is the case the b/f and c/f are then on the credit and debit side respectively as the tax payable balance is a liability and hence a credit balance.
Hope this clears it all up.
Thanks
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