The Following Information Is Reported in the Operating Activities Section

question 28

Multiple Choice

The following information is reported in the operating activities section of Gateway's statement of cash flows for 2014: Which one of the following conclusions can be assumed from the information provided?

• A) Gateway used the direct method to determine cash flows from operating activities.
• B) Gateway purchased more merchandise than it sold in 2014.
• C) Cash payments for merchandise purchases were less than the amount of merchandise purchased on credit during 2014.
• D) Cash payments for merchandise exceeded cost of goods sold by $200,000.

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Definitions:

Acquiring Entity

A company or individual that purchases or obtains control of another company or asset.

Voting Rights

The rights of shareholders to vote on company matters, such as the election of the board of directors or approval of significant corporate actions.

Governing Body

An organization or group responsible for making and enforcing rules and regulations within a specific field or area, such as a corporate board or regulatory agency.

Bound By Contract

The state of being legally obligated to another party as per the terms and conditions specified in a contract.