Last year Cumberland Corporation reported a cost of goods sold of $92,000. Inventories increased by $52,000 during the year, and accounts payable increased by $11,000. The company uses the direct method to determine the net cash provided by (used in) operating activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would be:

Question

Quizplus · Accepted Answer

The cost of goods sold adjusted to a cash basis is calculated by starting with the reported cost of goods sold and adjusting for changes in inventory and accounts payable. The formula is: Cost of Goods Sold + Increase in Inventory - Increase in Accounts Payable. So, $92,000 + $52,000 - $11,000 = $133,000.

Last Year Cumberland Corporation Reported a Cost of Goods Sold