A Company Uses the Direct Method to Prepare the Statement

question 146

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
Which of the following is correct about accounts payable transaction in the operating activities category in the statement of cash flows?

• A)The increase of $13,000 will be subtracted from net income.
• B)The increase of $13,000 will be added to net income.
• C)The increase of $13,000 will be added to purchases to determine payments to suppliers.
• D)The increase of $13,000 will be subtracted from purchases to determine payments to suppliers.

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