A company uses the indirect method to prepare the statement of cash flows. It presents the following amounts on its financial statements. *Relates solely to the acquisition of inventory
What will appear in the operating activities section related to salary payable?

Question

A company uses the indirect method to prepare the statement of cash flows. It presents the following amounts on its financial statements.  *Relates solely to the acquisition of inventory
What will appear in the operating activities section related to salary payable?

Quizplus · Accepted Answer

A decrease in salary payable means that less cash was paid out for salaries than was recorded as an expense, resulting in an increase in net income. Therefore, the decrease of $3,000 will be subtracted from net income in the operating activities section of the statement of cash flows, as the indirect method adjusts net income for non-cash items, such as changes in non-cash working capital accounts.

A Company Uses the Indirect Method to Prepare the Statement