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 amounts on its financial statements. $$\begin{array} { | l | r | r | } \hline & \text { End of this year } & \text { End af priar year } \\\hline \text { Accounts receivable } & \$ 110,000 & \$ 100,000 \\\hline \text { Cost af gouds sald } & 560,000 & \\\hline \text { Sales revenue } & 830,000 & \\\hline \text { Accounts payable* } & 75,000 & 67,000 \\\hline \text { Inventary } & 86,000 & 105,000 \\\hline \text { Salary payable } & 13,000 & 10,000 \\\hline \text { Salary expense } & 49,000 & 45,000 \\\hline\end{array}$$ *Relates solely to the acquisition of inventory
-
What will appear in the operating activities section related to accounts payable?

• A)The increase of $8,000 will be subtracted from purchases to determine payments to suppliers.
• B)The increase of $8,000 will be added to net income.
• C)The increase of $8,000 will be added to purchases to determine payments to suppliers.
• D)The increase of $8,000 will be subtracted from net income

---

Definitions:

Sugarless Gum

Chewing gum that does not contain sugar, often using artificial sweeteners instead.

Foam Swab

A soft, spongy tool used for medical or cleaning purposes, often for applying medication or collecting samples.

Incontinent

The inability to control bladder and/or bowel movements, leading to involuntary loss of urine or feces.

Skin Integrity

The condition of skin being intact, undamaged, and healthy, often considered in the context of wound management and healing.