When Three Buyers Purchase the Products of Three Producers, Nine

question 134

Multiple Choice

When three buyers purchase the products of three producers, nine transactions are required. If one intermediary serves both producers and buyers, the number of possible transactions is

• A) 15.
• B) 5.
• C) 18.
• D) 6.
• E) 20.

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Definitions:

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operations section is used rather than being derived from the income statement.

Prepaid Expenses

Costs paid for in advance of their use or consumption, recorded as assets on a balance sheet and gradually expensed over the period of use or benefit.

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are listed directly.

Administrative Expenses

Costs related to the general administration of a business, such as salaries of office staff, rent, and utilities.