Question

To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in accrued expenses is added to operating expenses other than depreciation.

a. True
b. False

Answer 1

True

Step-by-step explanation:

To determine cash payments under direct method the decrease in accrued expenses is added to the operating expenses payable . Accrued expense mean expenses incurred but not yet paid. A decrease in accrued expenses would suggest that accrued expenses have been paid therefore there has been an outflow of cash which will be added to cash paid for operating expenses.