The Following Information Was Taken from the Operating Activity Section

question 28

Multiple Choice

The following information was taken from the operating activity section of the 2016 statement of cash flows for Limited Corp: $\begin{array}{lr}\text { Additions to net income: Change in accounts payable } & \$ 2,000 \\\text { Deductions from net income: Change in inventories } & 8,000\end{array}$ ? Based on the information provided, which one of the following conclusions is correct?

• A) Inventories increased $8,000 in 2016.
• B) The direct method was used to prepare the operating section of the cash flow statement.
• C) Cash payments of merchandise exceeded cost of goods sold by $2,000.
• D) Accounts payable decreased $2,000 in 2016.

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