Assume that New Life uses the direct method of computing cash flows from operating activities.Based on the preceding information,what amount will be reported by the company as cash payments to suppliers for 2009?
A)$350,000
B)$348,000
C)$312,000
D)$352,000

Question

Quizplus · Accepted Answer

Under the direct method, the cash payment to suppliers is calculated by adding up all the purchases made during the period and deducting any changes in accounts payable. 
Cash payments to suppliers can be calculated as:
Purchases = $500,000 - $60,000 + $10,000 = $450,000
Cash payments to suppliers = Purchases - decrease in accounts payable = $450,000 - $98,000 = $352,000
Therefore, the correct answer is D) $352,000.

Assume That New Life Uses the Direct Method of Computing