If a company uses the direct method to prepare the statement of cash flows, how will the amount of cash payments to employees be computed?

Question

Quizplus · Accepted Answer

Under the direct method, the amount of cash payments to employees is computed by adding the salary expense to the decrease in salaries payable. This is because the ending balance of salaries payable is subtracted from the beginning balance to arrive at the decrease. So, this decrease represents the payment made to employees during the period.

If a Company Uses the Direct Method to Prepare the Statement