For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method:
-Decrease in accounts payable during a period.
A) Added in determining cash receipts from customers
B) Deducted in determining cash receipts from customers
C) Added in determining cash payments to suppliers
D) Deducted in determining cash payments to suppliers
E) Cash outflow - investing activity
F) Cash inflow - investing activity
G) Cash outflow - financing activity
H) Cash inflow - financing activity
I) Significant non-cash investing and financing activity
J) Is not shown

Question

Quizplus · Accepted Answer

A decrease in accounts payable during a period indicates that the company has paid more to its suppliers than the purchases made on credit. Therefore, it is added back to determine the cash payments to suppliers in the direct method of the statement of cash flows.

For Each of the Following Items, Indicate by Choosing the Appropriate