A Company Uses the Direct Method to Prepare the Statement

question 108

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 inventory in the operating activities category of the cash flow statement?

• A)The decrease of $25,000 will be subtracted from net income.
• B)The decrease of $25,000 will be added to net income.
• C)The decrease of $25,000 will be subtracted from cost of goods sold to determine payments to suppliers.
• D)The decrease of $25,000 will be added to cost of goods sold to determine payments to suppliers.

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Definitions:

New Car Models

The latest vehicles introduced by manufacturers that often include updated features, technologies, and designs.

Dealers

Entities that buy products from manufacturers or wholesalers to then sell to consumers or other businesses.

Supply Chain

A coalition of agencies, individuals, methodologies, intelligence, and assets organized to transition a product or service from the supplier to the final user.

Data Analysis

The process of examining, cleaning, transforming, and modeling data to discover useful information, inform conclusions, and support decision-making.