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A Company Uses the Direct Method to Prepare the Statement

Question 55

Multiple Choice

A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements: 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 $10,000 will be subtracted from salary expense to determine payments to employees. B) The increase of $10,000 will be subtracted from net income. C) The increase of $10,000 will be added to salary expense to determine payments to employees. D) The increase of $10,000 will be added to net income. *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 $10,000 will be subtracted from salary expense to determine payments to employees.
B) The increase of $10,000 will be subtracted from net income.
C) The increase of $10,000 will be added to salary expense to determine payments to employees.
D) The increase of $10,000 will be added to net income.

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