When the Direct Method Is Used to Determine Operating Cash

question 198

Multiple Choice

When the direct method is used to determine operating cash flows,how are salaries paid to employees reported on the statement of cash flows?

• A) as an operating activity
• B) as an investing activity
• C) as a financing activity
• D) as a noncash investing and financing activity

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for more accurate budgeting and forecasting.

Master Budget

Comprehensive financial planning document that includes all of a company's financial plans, including sales, production, purchasing, and financial budgets.

Flexible Budget Report

This is a financial report that adjusts to different levels of activity and provides a more accurate comparison of budgeted and actual performance.

Actual Activity

Actual activity refers to the real, measured amount of work completed or resources consumed within a given time frame, often compared against planned or budgeted levels in various contexts, such as accounting or project management.