Using the Direct Method

question 91

Multiple Choice

Using the Direct Method
For the following question(s) , indicate how each transaction described would be classified on a statement of cash flows if the operating activities section is prepared under the direct method.
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When using the direct method, where are salaries paid to employees reported on the statement of cash flows?

• A) Operating activity
• B) Investing activity
• C) Financing activity
• D) Noncash investing and financing activity

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Definitions:

Inflation Rate

The elevation in the percentage cost of goods and services across an economy over an established period.

Relative-price Variability

Fluctuations in the price of one good or service in relation to others, affecting purchasing decisions and economic equilibrium.

Inflation Rate

A measure of how quickly the cost of goods and services rises, thereby reducing the purchasing power.

Fixed Price

A pricing strategy where the selling price of a product or service is set and not subject to change based on market fluctuations or bargaining.