A Company Uses the Direct Method to Prepare the Statement

question 109

Multiple Choice

A company uses the direct method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
Which of the following is correct about salaries payable in the operating activities category of the cash flow statement?

• A)The increase of $4,000 will be subtracted from salary expense to determine payments to employees.
• B)The increase of $4,000 will be subtracted from net income.
• C)The increase of $4,000 will be added to salary expense to determine payments to employees.
• D)The increase of $4,000 will be added to net income.

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Definitions:

Intrinsic Rewards

Internal satisfaction or fulfillment derived from engaging in an activity, without external incentives.

Continuous Reinforcement

A reinforcement schedule in which a particular response is always reinforced.

Conditioned Response

A learned response to a previously neutral stimulus after it has been repeatedly associated with an unconditioned stimulus.

Unconditioned Stimulus

A stimulus that naturally triggers a response without the need for prior learning.