Qtopia Electric Company Uses the Direct Method to Prepare Its

question 34

True/False

Qtopia Electric Company uses the direct method to prepare its statement of cash flows.Qtopia has reported cost of goods sold of $85,000 on its income statement for 2017.If the balance in Accounts Payable,for merchandise inventory suppliers only,has decreased by $8,000 during the year,then $8,000 needs to be subtracted from $85,000 to calculate payments to suppliers for merchandise inventory purchases.

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Definitions:

Outstanding Checks

Outstanding checks refer to checks that have been written and recorded in the paying account but have not yet been cashed or cleared by the bank.

Bank Statement Adjustment

The act of reconciling the bank statement balance with the book balance by accounting for items that cause discrepancies between the two.

Company Books Adjustment

Modifications made to accounting records, such as correcting errors or updating entries based on new information, to ensure accuracy and compliance.

Bank Service Charge

Fees charged by a bank for the use of its services, such as account maintenance, wire transfers, and overdraft fees.