Final answer:
The correct option is 1). The reduction of wages payable is considered a cash outflow from operating activities on the statement of cash flows as it reflects the payment of an operating expense.
Step-by-step explanation:
The question asks which of the following would be classified as a cash outflow from operating activities on the statement of cash flows:
- Reduction of wages payable
- Collection of an outstanding loan
- Repayments of loan principal
- A guest's payment of the balance of her account
Among the options given, the reduction of wages payable would be considered a cash outflow from operating activities. When a company pays down its wages payable, it represents a cash outflow since this is the payment of an expense that falls under the operating activities of a business. This payment will reduce the company's liabilities and decrease its cash balance.
The collection of an outstanding loan and a guest's payment of the balance of her account would both be considered cash inflows. Repayment of loan principal is a financing activity, not an operating activity.
Operating activities typically include transactions related to the primary business activities such as receipts from goods sold and services provided, as well as payments made to suppliers, employees, and others. Payments to customers, expenses, and the realization of profits or losses are also part of operating activities.