A Company Uses the Direct Method to Prepare the Statement

question 161

Multiple Choice

A company uses the direct method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to inventory?

• A)The decrease of $18,000 will be subtracted from net income.
• B)The decrease of $18,000 will be added to net income.
• C)The decrease of $18,000 will be subtracted from cost of goods sold to determine payments to suppliers.
• D)The decrease of $18,000 will be added to cost of goods sold to determine payments to suppliers.

---

Definitions:

Equal Employment Opportunity Commission (EEOC)

A federal agency that administers and enforces civil rights laws against workplace discrimination.

Sex Discrimination

Unfair treatment of individuals based on their gender or sex.

Lesbian, Gay, Bisexual

Terms that describe sexual orientations: lesbian for women attracted to women, gay for men attracted to men, and bisexual for individuals attracted to both men and women.

Resource Acquisition

The process by which firms obtain necessary inputs and resources to carry out their operations.