If a company uses the direct method to prepare the statement of cash flows, how will the amount of cash purchases of inventory be computed?
A) The amount of cash purchases of inventory is computed as cost of goods sold plus ending inventory.
B) The amount of cash purchases of inventory is computed as cost of goods sold plus ending inventory plus beginning inventory.
C) The amount of cash purchases of inventory is computed as beginning inventory minus ending inventory minus cost of goods sold.
D) The amount of cash purchases of inventory is computed as cost of goods sold plus ending inventory minus beginning inventory.
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