In a Company That Uses the Direct Method to Prepare

question 141

Multiple Choice

In a company that uses the direct method to prepare the statement of cash flows, the amount of cash it uses to purchase inventory is computed as

• A)cost of goods sold plus ending inventory.
• B)cost of goods sold plus ending inventory, plus beginning inventory.
• C)beginning inventory minus ending inventory, minus cost of goods sold.
• D)cost of goods sold plus ending inventory, minus beginning inventory.

---

Definitions:

Self-Control Problem

The difficulty individuals face in resisting temptation or immediate gratification to achieve long-term goals.

Precommitment

The action of committing oneself to a course of action or decision before facing circumstances that might make that course of action more difficult.

Time Inconsistency

The tendency of people to change their plans about future actions because of a preference for immediate gratification over future benefits, leading to conflicts between long-term goals and short-term desires.

Running Partner

A companion or fellow athlete who runs alongside another person to provide motivation, pacing, or company.