Question

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

Options

• Outflow from operating activities.

• Outflow from investing activities.

• Outflow from financing activities.

• No effect on cash flow.

Answer 1

Outflow from operating activities.

Explanation:

Employee benefit payments are categorized as a cash outflow under operating activities in the cash flow statement and are a normal aspect of business operations.