Last year Cumberland Corporation reported a cost of goods sold of $120,000. Inventories increased by $35,000 during the year, and accounts payable increased by $20,000. The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would be:
A)$135,000
B)$100,000
C)$155,000
D)$105,000

Question

Quizplus · Accepted Answer

Cost of goods sold adjusted to a cash basis = Cost of goods sold + Increase in inventories - Increase in accounts payable= $120,000 + $35,000 - $20,000= $135,000

Last Year Cumberland Corporation Reported a Cost of Goods Sold