Question:
What will be the effect of transaction ‘Payment of employee benefit expenses’ on the cash flow statement?
What will be the effect of transaction ‘Payment of employee benefit expenses’ on the cash flow statement?
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Operating activities include transactions that affect the company’s core business operations, such as payments to employees.
Updated On: Jan 28, 2025
- Outflow from operating activities
- Outflow from investing activities
- Outflow from financing activities
- No effect on cash flow.
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The Correct Option is A
Solution and Explanation
Employee benefit expenses are directly related to the day-to-day operations of the business. Such payments are classified as cash outflows under operating activities in the cash flow statement.
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