Employee benefits expenses paid by the company are..................activity in the cash flow statement.

Operating

The correct answer is option 1- Operating.

Employee benefits expenses paid by the company are operating activity in the cash flow statement.

Operating activities are the activities that constitute the primary or main activities of an enterprise. For example, for a company manufacturing garments, operating activities are procurement of raw material, incurrence of manufacturing expenses, sale of garments, etc. These are the principal revenue generating activities (or the main activities) of the enterprise and these activities are not investing or financing activities. Employee benefit expenses is cash outflow for the benefit of employees of the company.