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A Company Uses the Direct Method to Prepare the Statement

Question 142

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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:
A company uses the direct method to prepare the statement of cash flows.It presents the following data on its financial statements: *Relates solely to the acquisition of inventory Which of the following is correct about accounts payable transaction in the operating activities category in the statement of cash flows? A) The increase of $10,000 will be subtracted from net income. B) The increase of $10,000 will be added to net income. C) The increase of $10,000 will be added to purchases to determine payments to suppliers. D) The increase of $10,000 will be subtracted from purchases to determine payments to suppliers.
*Relates solely to the acquisition of inventory
Which of the following is correct about accounts payable transaction in the operating activities category in the statement of cash flows?


A) The increase of $10,000 will be subtracted from net income.
B) The increase of $10,000 will be added to net income.
C) The increase of $10,000 will be added to purchases to determine payments to suppliers.
D) The increase of $10,000 will be subtracted from purchases to determine payments to suppliers.

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