Gary Company Reports a $15,000 Increase in Inventory and a $5,000

question 156

Multiple Choice

Gary Company reports a $15,000 increase in inventory and a $5,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $160,000. The cash payments made to suppliers were

• A) $160,000.
• B) $170,000.
• C) $140,000.
• D) $155,000.

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Definitions:

Retained Earnings

The portion of a business's profits not distributed to shareholders as dividends but retained for reinvestment in the business or to pay debt.

Net Income

The amount of profit remaining after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from total revenue; also known as net profit.

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash payments or additional shares.

Par Common Stock

Par common stock is the nominal or face value assigned to common shares in the corporate charter, often impacting the accounting treatment of stock issuance.