Question

In: Finance

Under GAAP, how would employee salaries be accounted for on the statement of cash flows? a.)...

Under GAAP, how would employee salaries be accounted for on the statement of cash flows?

  • a.)

    As a decrease in cash flow from operations

  • b.)

    As an increase in cash flow from investment

  • c.)

    As an increase in cash flow from financing

  • d.)

    As a decrease in cash flow from financing

Solutions

Expert Solution

The cash flow statement is comprises of three types of activities, namely:

  1. Cash flow resulting from operating activities
  2. Cash flow resulting from investing activities
  3. Cash flow resulting from financing activities.

Operating activities include the production, sales, and delivery of the company’s product as well as collecting payments from its customers. This could include purchasing raw materials, employee benefit costs, advertising, and shipping the product, selling expenses, etc

Accordingly, Under GAAP, employee salaries would be accounted for on the statement of cash flows by a decrease in cash flow from operations

Answer: Option A

jeff jeffy answered 2 years ago
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