Company D
The following information was reported by a catering company:
$\begin{array}{llr}
\text { Accrued liabilities, December 31, Year 2 } &\$92,000\
\text {Accued liablities, December 31, Year 1 } &55,000\
\text { Operating expenses for Year 2} &200,000
\end{array}$

-Refer to the figure Company D.Under the direct method,what amount would be reported in the operating activities section of Company D's statement of cash flows for payments for operating expenses?

Question

Company D
The following information was reported by a catering company:
 $\begin{array}{llr}
  \text { Accrued liabilities, December 31, Year 2  } &\$92,000\
 \text {Accued liablities, December 31, Year 1   } &55,000\
 \text {  Operating expenses for Year 2} &200,000
\end{array}$

-Refer to the figure Company D.Under the direct method,what amount would be reported in the operating activities section of Company D's statement of cash flows for payments for operating expenses?

Quizplus · Accepted Answer

The direct method reports cash payments for operating expenses. The increase in accrued liabilities from Year 1 to Year 2 represents cash payments made in Year 2 for expenses incurred in Year 1. Therefore, the amount reported in the operating activities section of Company D's statement of cash flows for payments for operating expenses is $92,000 - $55,000 = $37,000. Adding this to the operating expenses for Year 2 of $200,000 gives $237,000.

Company D the Following Information Was Reported by a Catering

Company D
the Following Information Was Reported by a Catering