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 $15,000 will be subtracted from net income.
• B)The decrease of $15,000 will be added to net income.
• C)The decrease of $15,000 will be subtracted from cost of goods sold to determine payments to suppliers.
• D)The decrease of $15,000 will be added to cost of goods sold to determine payments to suppliers.

---

Definitions:

Preoccupied

Engrossed in thought or consumed with something specific, often ignoring or oblivious to one’s surroundings.

Apthetic

Exhibiting a lack of interest, enthusiasm, or concern; indifferent.

Intelligence Test Scores

The results obtained from tests designed to assess cognitive abilities, including problem-solving, reasoning, and understanding.

Genetic Predisposition

The elevated probability of suffering from a specific disease owing to one's genes.