Table 17 -5
Parmesan Company Uses the Direct Method for Its

question 201

Multiple Choice

Table 17 -5
Parmesan Company uses the direct method for its statement of cash flow. It reports the following information regarding the year 2017:
From the income statement:
$$\begin{array} { l l } \text { Revenues: } & \$ 240,000 \\\text { Cost of goods sold: } & \$ 190,000 \\\text { Operating expenses: } & \$ 25,000\end{array}$$ $\begin{array}{lcc}\text { From the balance sheet: } & \text { Beginning balance } & \text { Ending balance } \\\text { Accounts receivable: } & \$ 12,000 & \$ 15,000 \\\text { Inventory: } & \$ 22,000 & \$ 18,000 \\\text { Accounts payable: } & \$ 7,000 & \$ 12,000 \\\text { Accrued liabilities: } & \$ 3,000 & \$ 1,200\end{array}$ Note: accounts payable relate to inventory purchases; accrued liabilities relate to operating expenses
-Refer to Table 17-5.On the cash flow statement,what amount will be shown for payments to suppliers for operating expenses?

• A) $26,800
• B) $23,200
• C) $30,000
• D) $18,600

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Definitions:

Butan-1-ol

A four-carbon chain alcohol with the hydroxyl group attached to the first carbon.

1-butanamine

A chemical compound, also known as butylamine, which is an amine with the formula CH3(CH2)3NH2, used in the manufacture of pharmaceuticals and pesticides.

IUPAC Name

The systematic name given to a chemical substance, based on a set of standard rules by the International Union of Pure and Applied Chemistry.

Amine

An organic compound derived from ammonia; characterized by the presence of a nitrogen atom bonded to carbon atoms.