Parmesan Company Uses the Direct Method for Its Statement of Cash

question 73

Multiple Choice

Parmesan Company uses the direct method for its statement of cash flow. It reports the following information regarding the year 2014: From the income statement:
Sales Revenues, $265,000
Cost of Goods Sold, $210,000
Operating expenses, $31,000
From the balance sheet: On the statement of cash flows, what amount will be shown for payments to suppliers for inventory purchases? (Assume that Accounts Payable are for purchases of inventory only.)

• A)$204,300
• B)$211,800
• C)$196,800
• D)$208,200

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Definitions:

Solomon Asch

He was a psychologist best known for his research on conformity, showing how individuals often conform to the opinions of the majority even when they are contrary to their own beliefs.

Conformity

The act of matching attitudes, beliefs, and behaviors to what is perceived as social norms.

Normative Social Influence

The effect other individuals have on us, causing conformity so we gain their approval and acceptance.

Group

A collection of individuals who interact with one another, share similar characteristics, and collectively have a sense of unity.