When preparing a statement of cash flows using the direct method, accrual of payroll expense is:
A)Reported as an operating activity.
B)Reported as an investing activity.
C)Reported as a financing activity.
D)None of these is correct.Accruing expenses does not affect cash flows.

Question

Quizplus · Accepted Answer

Accruing payroll expense does not involve a cash transaction, so it does not appear on the statement of cash flows when using the direct method.

When Preparing a Statement of Cash Flows Using the Direct