When preparing a statement of cash flows using the direct method, accrual of payroll expense is:
A) Reported as an operating activity.
B) Reported as an investing activity.
C) Reported as a financing activity.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

The accrual of payroll expense is not directly reported in the statement of cash flows using the direct method. Instead, cash payments for payroll are reported as operating activities.

When Preparing a Statement of Cash Flows Using the Direct