Statement of Cash Flows F06-20b

How would you calculate cash paid for operating expenses, when using the direct cash flow method?

1. Debit: Operating expenses (given).
2. Credit: Decrease in prepaid expense (given).
3. Credit: Increase in expense payable (given).
4. Credit: Cash paid for operating expenses (is the amount required to balance).
5. If there is an increase in prepaid expenses and a decrease in expenses payable, then you would debit rather than credit.