Bright Eyes Paints Company Uses the Direct Method for Preparing

question 50

Multiple Choice

Bright Eyes Paints Company uses the direct method for preparing its statement of cash flow.Bright Eyes reports the following information regarding 2017:
From the income statement:
Sales Revenues,$266,000
Cost of Goods Sold,$213,000
Operating Expenses,$36,000
Net Income $17,000
From the balance sheet:

Assume that there were no sales of long-term assets,no interest revenue,and no expenses other than the expenses shown above.Also,assume that Accounts Payable are for purchases of merchandise inventory only.What amount will be shown for the net cash flow from operating activities?

• A)$61,700
• B)$23,600
• C)$17,000
• D)$10,400

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Definitions:

Long-Term Investments

Assets purchased by a company intended to be held for more than one year for the purpose of earning a return.

Special Purpose

An activity or function created for a particular objective or for a specific job.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's operating cycle, whichever is longer.

Held-To-Maturity

A classification for investments in fixed-income securities that an investor intends and is able to hold until maturity, recognizing unrealized gains or losses in the financial statements.