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

---

Definitions:

Long Call

An options trading strategy that involves buying call options with the anticipation that the underlying stock will rise in value.

Short Put

A type of options strategy where the investor sells put options, betting that the price of the underlying asset will rise above the strike price.

Stock Price Stable

A condition where a stock's price shows minimal volatility and maintains a relatively constant value over a period.

Long Call

An options trading strategy where an investor purchases a call option, betting that the underlying asset's price will increase.