The following selected account balances appeared on the financial statements of the Washington Company: The Washington Company uses the direct method to calculate net cash flow from operating activities.
Cash paid to suppliers is
A) $39,000
B) $33,000
C) $29,000
D) $23,000

Question

The following selected account balances appeared on the financial statements of the Washington Company:  The Washington Company uses the direct method to calculate net cash flow from operating activities.
Cash paid to suppliers is
A) $39,000 
B) $33,000 
C) $29,000 
D) $23,000

Quizplus · Accepted Answer

To calculate cash paid to suppliers using the direct method, we start with the cost of goods sold ($65,000) and add the increase in accounts payable ($6,000) and subtract the decrease in accounts payable ($38,000) which gives us a cash paid to suppliers of $33,000.

The Following Selected Account Balances Appeared on the Financial Statements