The Following Information Is Reported in the Operating Activities Category

question 87

Multiple Choice

The following information is reported in the Operating Activities category of Gateway's statement of cash flows for 2017: ?
$$\begin{array} { l r } \text { Net income } & \$ 1,200,000 \\\text { Increase in inventories } & 600,000 \\\text { Decrease in accounts payable related to inventories } & 400,000\end{array}$$ Which one of the following conclusions can be assumed from the information provided?

• A)Gateway used the direct method to determine cash flows from operating activities.
• B)Gateway purchased more merchandise than it sold in 2017.
• C)Cash payments for merchandise purchases were less than the amount of merchandise purchased on credit during 2017.
• D)Cash payments for merchandise exceeded cost of goods sold by $200,000.

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