A Company Uses the Direct Method to Prepare the Statement

question 158

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 accounts payable?

• A)The increase of $18,000 will be subtracted from net income.
• B)The increase of $18,000 will be added to net income.
• C)The increase of $18,000 will be added to purchases to determine payments to suppliers.
• D)The increase of $18,000 will be subtracted from purchases to determine payments to suppliers.

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Definitions:

Contagion Theory

A theory in social psychology that explains how ideas, attitudes, and behaviors spread through groups and crowds, akin to the transmission of pathogens.

Breakdown Theory

A sociological theory that suggests societal breakdowns, such as high levels of dysfunction or disorganization, can lead to collective action and social movements.

Anomie

A state or condition of society or an individual characterized by a breakdown or absence of social norms and values, often leading to feelings of alienation and purposelessness.

Contagion Theory

A social theory suggesting that ideas, attitudes, and behaviors spread through groups as if they were infections, influencing individuals to adopt them without conscious realization.