Operating expenses other than depreciation expense for the year were $400,000.Accrued expenses payable decreased by $35,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:
A)$400,000.
B)$435,000.
C)$365,000.
D)$35,000.

Question

Quizplus · Accepted Answer

The cash payments for operating expenses are determined by adjusting the operating expenses for changes in related balance sheet accounts. As the accrued expenses payable decreased by $35,000, the cash payments for operating expenses would be higher than the operating expenses recorded for the year ($400,000). Therefore, the correct answer is $400,000 + $35,000 = $435,000. Option B is correct.

Operating Expenses Other Than Depreciation Expense for the Year Were