Parmesan Company Uses the Direct Method for Its Statement of Cash

question 146

Multiple Choice

Parmesan Company uses the direct method for its statement of cash flow. It reports the following information regarding the year 2013:
$$\begin{array}{l}\text { From the income statement: }\\\begin{array} { l r } \text { Revenues: } & \$ 240,000 \\\text { Cost of goods sold: } & \$ 190,000 \\\text { Operating expenses: } & \$ 25,000\end{array}\\\begin{array} { c c c } \text { From the balance sheet: } & \text { Beginning balance } & \text { Ending balance } \\\text { Accounts receivable: } & \$ 12,000 & \$ 15,000 \\\text { Inventory: } & \$ 22,000 & \$ 18,000 \\\text { Accounts payable: } & \$ 7,000 & \$ 12,000 \\\text { Accrued liabilities: } & \$ 3,000 & \$ 1,200\end{array}\end{array}$$
- On the statement of cash flows, what amount will be shown for payments to suppliers for inventory purchases? (Please assume that accounts payable are for purchases of inventory only.)

• A) $185,000
• B) $194,000
• C) $181,000
• D) $191,000

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Definitions:

Pay More Attention

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Stimuli

External factors or events that elicit responses or reactions from living organisms or systems.

Equal Amounts

A term referring to a situation where two or more entities are present in the same quantity or measure.

Immaturity

A state or condition of not being fully developed or lacking the emotional or intellectual maturity expected for a certain age.