Mei Company Uses the Direct Method to Prepare Its Statement

question 68

Multiple Choice

Mei Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for the year 2014: Cost of Goods Sold, $155,000
Inventory, beginning balance, $26,000
Inventory, ending balance, $63,000
Accounts Payable, beginning balance, $8,100
Accounts Payable, ending balance, $5,100
Operating expenses, $27,000
Accrued Liabilities, beginning balance, $2,500
Accrued Liabilities, ending balance, $6,000
In the operating activities section of the statement of cash flows, what amount will be shown for payments to suppliers? Assume Accrued Liabilities relate to Operating Expenses.

• A)$171,500
• B)$160,000
• C)$195,000
• D)$218,500

---

Definitions:

Import Quota

A government-imposed limit on the quantity or value of goods that can be imported into a country.

Deflationary

Pertains to a period when the general price levels in an economy are falling, which can increase the real value of money.

Tariffs

Taxes imposed by a government on imported goods, often used to protect domestic industries and regulate trade balances.

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity.