Parmesan Company Uses the Direct Method for Its Statement of Cash

question 90

Multiple Choice

Parmesan Company uses the direct method for its statement of cash flow. It reports the following information regarding the year 2014: From the income statement:
Sales Revenues, $265,000
Cost of Goods Sold, $210,000
Operating expenses, $31,000
Net Income $24,
From the balance sheet:
$$\begin{array} { | l | r | r | } \hline & \text { Beginning Balance } & \text { Ending Balance } \\\hline \text { Accounts Receivable: } & \$ 14,500 & \$ 17,800 \\\hline \text { Inventory: } & 23,500 & 17,800 \\\hline \text { Accounts Payable: } & 6,000 & 13,500 \\\hline \text { Accrued Liabilities: } & 4,000 & 1,500 \\\hline\end{array}$$ Assume that there were no sales of long-term assets, no Interest Revenue, and no expenses other than the expenses shown above. Also, assume that Accounts Payable are for purchases of inventory only. On the statement of cash flows, what amount will be shown for the net cash flow from operating activities?

• A) $64,900
• B) $31,400
• C) $23,500
• D) $18,600

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Definitions:

Sample Means

Average values derived from a subset (sample) of a larger population.

Standard Deviation

Square root of the variance that represents the average deviation of a score from the mean.

Sampling Distribution

The probability distribution of a given statistic based on a random sample, used to estimate properties of an underlying population.

Mean

The arithmetic average of a set of scores.