Designer Paints Company Uses the Direct Method for Preparing Its

question 124

Multiple Choice

Designer Paints Company uses the direct method for preparing its statement of cash flow.Designer Paints reports the following information regarding 2018: From the income statement:
Sales Revenues,$267,000
Cost of Goods Sold,$213,000
Operating Expenses,$33,000
From the balance sheet:
What amount will be shown for payments to suppliers for Merchandise Inventory purchases? (Assume that Accounts Payable are for purchases of merchandise inventory only. )

• A)$207,300
• B)$213,900
• C)$200,700
• D)$212,100

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Definitions:

Effective-Interest Method

A method of calculating the interest expense on a bond that factors in the bond's book value and yield to maturity.

Discounted Bond Issue

The sale of bonds for less than their face value, typically to compensate investors for taking on additional risk or for interest rates being higher than the bond's coupon rate.

GAAP

Generally Accepted Accounting Principles, a set of accounting standards and procedures used in the compilation of financial statements in the U.S.

Lessee

The party in a lease agreement who rents or leases property from the lessor.