Under the direct method of preparing the statement of cash flows,the computation of payments to suppliers includes:
A)payments for inventory only.
B)payments for operating expenses only.
C)payments for inventory and operating expenses.
D)payments for inventory,operating expenses,interest expense and income taxes.

Question

Quizplus · Accepted Answer

The direct method of preparing the statement of cash flows requires the disclosure of actual cash payments made for inventory and operating expenses, which includes payments made to suppliers. Therefore, the computation of payments to suppliers includes payments made for both inventory and operating expenses. The direct method does not provide cash outflows for interest expense and income taxes separately.

Under the Direct Method of Preparing the Statement of Cash