Question

Operating expenses other than depreciation for the year were $400,000. Accrued expenses increased by $35,000. What are the cash payments for operating expenses reported on the cash flow statement using the direct method?

Answer 1

Answer:

$ 365,000

Explanation:

Given data:

The operating expenses for the year = $ 400,000

Increase in the accrued expenses = $ 35,000

Now,

the cash payment for the operating expenses will be calculated as the difference of the  operating expenses and the increase in accrued expenses

thus,

mathematically,

cash payment for the operating expenses = operating expenses - increase in accrued expenses

on substituting the values in the above formula, we get

cash payment for the operating expenses = $ 400,000 - $ 35,000

or

cash payment for the operating expenses = $ 365,000