Assume That the Direct Method Is Used to Prepare the Operating

question 188

Multiple Choice

Assume that the direct method is used to prepare the operating activities section of the statement of cash flows. When Accrued Liabilities increase, it means that the company:

• A) paid more cash than it recorded as operating expenses.
• B) paid less cash than it recorded as operating expenses.
• C) prepaid the operating expenses before they were incurred or recorded.
• D) paid for the operating expenses as they were recordeD.
• When expenses are recorded, the balance in Accrued Liabilities increases. When payments are made, Accrued Liabilities decreases. When Accrued Liabilities increase, it means the company paid that much less cash than it recorded as operating expenses. This amount must be subtracted when computing cash paid to employees and service suppliers for operating expenses.

---

Definitions:

Enterprise Social Media

Online platforms and technologies used within a company to enhance communication, collaboration, and information sharing among employees.

360-Degree Feedback

Performance appraisal that uses the input of supervisors, employees, peers, and clients or customers of the appraised individual.

Controversial Policy

A policy that generates significant debate or disagreement among groups or individuals due to differing values, beliefs, or interests.

Rich Communication Medium

A rich communication medium is a method of communication that can transmit immediate feedback and multiple cues (such as tone, facial expressions, and body language), enhancing the quality and depth of communication.