The following information was reported by a catering company: $\begin{array}{ll}
\text { Accrued liabilities, December 31, 2014 } &\$ 92,000 \
\text { Accrued liabilities, December 31, 2013 } &55,000 \
\text { Operating expenses for 2014 } &200,000
\end{array}$ What amount would be reported in the operating activities section of the statement of cash flows for Payments for Operating Expenses under the direct method?

Question

Quizplus · Accepted Answer

Under the direct method, payments for operating expenses are calculated as follows:
Operating expenses for the current period + increase in accrued liabilities - decrease in accrued liabilities
= $200,000 + ($92,000 -$55,000) = $237,000
Therefore, the correct option is B) $163,000, which is the difference between the total operating expenses and the payments for operating expenses under the direct method: $200,000 - $237,000.

The Following Information Was Reported by a Catering Company What Amount Would Be Reported in the Operating Activities Section