A Company Uses the Direct Method to Prepare the Statement

question 1

Multiple Choice

A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements. *Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts payable?

• A)The increase of $15,000 will be subtracted from net income.
• B)The increase of $15,000 will be added to net income.
• C)The increase of $15,000 will be added to purchases to determine payments to suppliers.
• D)The increase of $15,000 will be subtracted from purchases to determine payments to suppliers.

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