A Company Uses the Direct Method to Prepare the Statement

question 2

Multiple Choice

A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements. *Relates solely to the acquisition of inventory
What will appear in the operating activities section related to salaries payable?

• A)The increase of $4500 will be subtracted from salary expense to determine payments to employees.
• B)The increase of $4500 will be subtracted from net income.
• C)The increase of $4500 will be added to salary expense to determine payments to employees.
• D)The increase of $4500 will be added to net income.

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Definitions:

Deposit

A sum of money placed into a bank account or with a financial institution as a part of a transaction or for safekeeping.

Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.

Withdraw

The act of removing funds from a bank account or the cessation of investment in a particular asset or undertaking.

Retire

The act of withdrawing from one's position or profession, often marking the end of one's career.