Operating expenses (other than depreciation)for the year were $230,000. Prepaid expenses increased by $13,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Question

Quizplus · Accepted Answer

When using the direct method for the cash flow statement, an increase in prepaid expenses means that more cash was paid than the expenses recognized. Therefore, you add the increase in prepaid expenses ($13,000) to the operating expenses ($230,000) to get $243,000.

Operating Expenses (Other Than Depreciation)for the Year Were $230,000