Using the Direct Method of Preparing the Statement of Cash

question 162

Multiple Choice

Using the direct method of preparing the statement of cash flows,which of the following is not an activity generating operating cash flows?

• A)Issuance of debt
• B)Payments to suppliers
• C)Payments for income taxes
• D)Payments for operating expenses

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Definitions:

Net Pay

The amount of an employee's earnings after all deductions, such as taxes and retirement contributions, have been subtracted.

Social Security Tax

A tax that funds the Social Security program, deducted from employees' salaries and matched by employers, supporting retirees, disabled workers, and survivors.

Federal Income Tax

This is a tax levied by the United States Internal Revenue Service on the annual earnings of individuals, corporations, trusts, and other legal entities.

Social Security Tax

A tax that funds the Social Security program, typically collected as part of the FICA tax.