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 purchases and adjust for the change in accounts payable. Purchases for the year are $54,000, and the increase in accounts payable is $21,000 ($10,000 ending balance less $31,000 beginning balance). Therefore, cash paid to suppliers is $54,000 - $21,000 = $33,000. So, the best choice is B.

The Following Selected Account Balances Appeared on the Financial Statements