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Accounts receivable Cost of goods sold year $115,000 520,000 $100,000

Accounts receivable Cost of goods sold year $115,000 520,000 $100,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements: End of prior year End of this year $115,000 $100,000 520,000 850,000 Accounts receivable Cost of goods sold Sales revenue 65,000 110,000 12,000 44,000 Accounts payable* 81,000 Inventory 92,000 Salary payable 15,500 Salary expense 50,000 *Relates solely to the acquisition of inventory What will appear in the operating activities section related to accounts payable? A. The increase of $16,000 will be subtracted from net income. B. The increase of $16,000 will be subtracted from purchases to determine payments to suppliers. OC. The increase of $16,000 will be added to purchases to determine payments to suppliers D. The increase of $16,000 will be added to net income.
Transcribed Image Text:A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements: End of prior year End of this year $115,000 $100,000 520,000 850,000 Accounts receivable Cost of goods sold Sales revenue 65,000 110,000 12,000 44,000 Accounts payable* 81,000 Inventory 92,000 Salary payable 15,500 Salary expense 50,000 *Relates solely to the acquisition of inventory What will appear in the operating activities section related to accounts payable? A. The increase of $16,000 will be subtracted from net income. B. The increase of $16,000 will be subtracted from purchases to determine payments to suppliers. OC. The increase of $16,000 will be added to purchases to determine payments to suppliers D. The increase of $16,000 will be added to net income.
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