The Cost of Merchandise Sold During the Year Was $50,000

question 97

Multiple Choice

The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable (all owed to merchandise suppliers) were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

• A) $49,000
• B) $47,000
• C) $51,000
• D) $53,000

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Definitions:

Invested Capital

The total amount of money that shareholders and debt holders have invested in a company for long-term use.

Idle Capacity

Unused or underutilized production or operational capacity within a business, often resulting in inefficiency and increased costs.

Excess Equipment

Unused or surplus machinery and tools that exceed the current production needs of a company.

Sales Increase

A rise in the volume or value of products or services sold by a business over a specific period.