When it comes to showing your payroll expenses and why not all expenses relating to personnel, i.e. taxes paid, benefit plans, fringe benefits and so on, the question arising is how to show those expenses on the statement of cash flows.\u00a0<\/p>\n
Statement of cash flows can be prepared using two methods \u2013 with cash flows from operating activities shown using the direct method or indirect method. Cash flows from other activities, that is from investing and from financing activities, is always shown using the direct method, which is using the actual cash movements.<\/p>\n
First off we should determine the type of activity payments to personnel fall under. As we have discussed the components of the statement of cash flows, we can conclude that the payments to personnel are rather from operating activities than from any of the other.<\/p>\n
Taking the operating activities cash flows to pieces leaves us with either \u2018operating profit\u2019 (if the statement starts from the mentioned line, could be \u2018net profit\u2019 as well; is used when applying the indirect method whereby personnel expenses are within the profit already and are adjusted with \u2018changes in payables and prepayments\u2019 line on the statement of cash flows) or with \u2018payments to personnel\u2019 (when using the direct method, where you\u2019d show cash outflows by major groups, i.e. \u2018payments to suppliers\u2019 and so on.<\/p>\n","protected":false},"excerpt":{"rendered":"
When it comes to showing your payroll expenses and why not all expenses relating to personnel, i.e. taxes paid, benefit plans, fringe benefits and so on, the question arising is how to show those expenses on the statement of cash flows.\u00a0<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[],"class_list":["post-5122","post","type-post","status-publish","format-standard","hentry","category-1-9-payables-to-employees"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t