A company uses the indirect method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts payable?
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 subtracted from cost of goods sold.
D)The increase of $10,000 will be added to cost of goods sold.

Question

A company uses the indirect method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts payable?
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 subtracted from cost of goods sold. 
D)The increase of $10,000 will be added to cost of goods sold.

Quizplus · Accepted Answer

The Answer of A company uses the indirect method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts payable?
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 subtracted from cost of goods sold. 
D)The increase of $10,000 will be added to cost of goods sold.

A Company Uses the Indirect Method to Prepare the Statement