A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its December 31, 2009 financial statements.
*Relates solely to the acquisition of inventory
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What will appear in the operating activities section related to accounts payable?

Question

A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its December 31, 2009 financial statements.
 *Relates solely to the acquisition of inventory
-
What will appear in the operating activities section related to accounts payable?

Quizplus · Accepted Answer

The increase in accounts payable represents an increase in the company's obligations to its suppliers. This increase will be subtracted from purchases to determine the amount of payments made to suppliers during the period.

A Company Uses the Direct Method to Prepare the Statement