When Using the Direct Method, How Are Salaries Paid to Employees

question 110

Multiple Choice

When using the direct method, how 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:

Nonrivalry

A characteristic of a good or service whereby its consumption by one individual does not reduce its availability for consumption by others.

Nonexcludability

The inability to keep nonpayers (free riders) from obtaining benefits from a certain good; a characteristic of a public good.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are available to all members of society and one person's consumption does not reduce availability for others.

Public Good

A good or service offered to every member of a society for free, supplied by either government entities or private individuals or groups, without seeking financial gain.