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:

Economic Profits

Refers to the financial gains that exceed the total costs, including both explicit and implicit costs, of a business.

Enter Industry

The act of starting or initiating business operations in a particular market sector.

Long Run

The long run is a time period sufficiently long that all factors of production and costs can be fully adjusted, including plant sizes, machinery, and entry or exit from an industry.

Monopolistically Competitive

A market structure where many firms sell similar but not identical products, allowing them some power to influence prices.