An increase in accrued expenses results in a cash outflow on the statement of cash flows.

Question

Quizplus · Accepted Answer

An increase in accrued expenses does not result in a cash outflow on the statement of cash flows. Accrued expenses represent expenses that have been incurred but not yet paid, so they are included in the "Accounts Payable" section of the balance sheet. Only actual cash payments made during the period are reflected in the statement of cash flows. Therefore, an increase in accrued expenses would be reflected in the "Increase in Accounts Payable" section of the financing activities section of the statement of cash flows.

An Increase in Accrued Expenses Results in a Cash Outflow