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.

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Definitions:

Deposits In Reserve

Money that commercial banks are required to keep in the form of vault cash or deposits with the central bank, as a regulation to ensure banks can meet depositor demands.

Money Supply

The total amount of currency and other liquid instruments in a country's economy as of a particular time.

Leakage Current

The undesired flow of electrical current through an insulating medium or unintended path, often leading to inefficiencies or safety concerns.

PLC Input

An electrical or signal input to a Programmable Logic Controller from sensors or devices, used to influence PLC programs.