Question

What will be the effect of transaction ‘Payment of employee benefit expenses’ on the cash flow statement?

• A. Outflow from operating activities
• B. Outflow from investing activities
• C. Outflow from financing activities
• D. No effect on cash flow

Hint:

Operating activities involve cash flows related to the core operations of the business, such as revenue and expenses.

Answer 1

The Correct Option is A

Payment of employee benefit expenses is a part of routine business operations. Therefore, it is classified as an outflow from operating activities in the cash flow statement.