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:

Opportunity Costs

The penalty of bypassing the next most advantageous option when a decision is made.

Small Business

A privately owned corporation, partnership, or sole proprietorship that has fewer employees and less annual revenue than a medium or large company.

Risk-Free

Refers to an investment that is considered to have no risk of financial loss.

Perfectly Competitive Market

A market structure characterized by a large number of small firms, homogeneity of products, free entry and exit, and perfect information, leading to firms being price takers.