The Following Information Is Available for the Year Ended December

question 129

Multiple Choice

The following information is available for the year ended December 31: $\begin{array} { | l | r | } \hline \text { Beginning raw materials inventory } & \$ 11,000 \\\hline \text { Raw materials purchases } & 86,000 \\\hline \text { Ending raw materials inventory } & 10,400 \\\hline \text { Manufacturing supplies expense } & 900 \\\hline\end{array}$ The amount of raw materials used in production for the year is:

• A) $87,500.
• B) $85,700.
• C) $86,900.
• D) $85,400.
• E) $86,600.

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Definitions:

Indirect Method

A method of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate cash from operating activities.

Net Income

Represents the total earnings of a company after subtracting all expenses, taxes, and costs from its total revenue.

Accounts Receivable

Debts owed by customers to a corporation for goods or services that have been delivered but remain unpaid.

Indirect Method

A technique used in cash flow statement preparation that adjusts net income for changes in non-cash accounts to calculate operating cash flow.