Using the Direct Method to Prepare the Statement of Cash

question 143

Multiple Choice

Using the direct method to prepare the statement of cash flows, cash payments to supplies is computed as

• A)interest expense minus the decrease in accounts payable.
• B)interest expense minus the decrease in merchandise inventory.
• C)purchases minus the increase in accounts payable.
• D)interest expense minus the increase in merchandise inventory.

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Definitions:

Prices of Goods

The amount of money required to purchase specific products or commodities in the market.

Total Satisfaction

The complete or maximum level of well-being or happiness that a consumer derives from consuming goods and services.

Marginal Rate of Substitution

The rate at which a consumer is willing to substitute one good for another while maintaining the same level of satisfaction.

Units of Chicken

A measurement term referring to the quantity of chicken, often used in the context of agriculture, production, or sales.