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:

Intellectual Capital

The intangible value of a business's knowledge, experience, and ideas.

Operating Capital

Funds required to run the day-to-day operations of a business, crucial for maintaining liquidity and operational efficiency.

Venture Capital

Financing provided by investors to startup companies and small businesses with long-term growth potential.

Task Performance

The execution or accomplishment of specific duties or responsibilities associated with a person's job or role.