A Business Has Cost of Sales of £38 000 and Sales

question 6

Multiple Choice

A business has cost of sales of £38 000 and sales of £55 000, It had £3 000 in inventory at the start of the year and purchased £43 000 of goods during the year. All transactions were for cash.
-what was the cash flow for the year?

• A) £17000
• B) £ 9000
• C) £12000
• D) £14000
• E) None of the above

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Definitions:

Prepaid Expenses

Payments for goods or services that will be received in the future, which are recorded as assets until they are actually used or consumed.

Adjusting Entry

A journal entry made at the end of an accounting period to align the books with the accrual basis of accounting.

Supplies Expense

Costs incurred for office or operational supplies used within a business during a specific accounting period.

Accounts Payable

Liabilities representing amounts owed by a company to creditors for purchases of goods or services on credit, typically due within a short period.