During the year, Salaries Payable decreased by $12,000.Using the direct method of reporting cash flows from operating activities, if Salaries Expense amounted to $450,000 for the year, the cash paid to employees (including deductions from gross pay) is
A)$462,000.
B)$438,000.
C)$450,000.
D)$454,000.

Question

Quizplus · Accepted Answer

The decrease in Salaries Payable indicates that more cash was paid than the Salaries Expense recorded. Therefore, cash paid to employees is $450,000 (Salaries Expense) + $12,000 (decrease in Salaries Payable) = $462,000.

During the Year, Salaries Payable Decreased by $12,000