When using the direct method to determine operating cash flows,how are salaries paid to employees reported on the Statement of Cash Flows?
A)Operating activity
B)Investing activity
C)Financing activity
D)Noncash investing and financing activity
E)Not reported on the statement of cash flows

Question

Quizplus · Accepted Answer

Salaries paid to employees are considered to be part of the operating expenses of a company and therefore, are reported as an operating activity on the Statement of Cash Flows when using the direct method. The operating section of the Statement of Cash Flows shows the cash inflows and outflows that are related to the company's primary business activities.

When Using the Direct Method to Determine Operating Cash Flows,how