Clean Sweep,Inc.started the month of June with $600 worth of cleaning supplies.During the month,Clean Sweep purchased $400 of supplies for cash.At June 30,$300 worth of supplies was unused.How will the company report these events on its statement of cash flows for the month of June?
A)The statement of cash flows will show $(400)cash paid for supplies.
B)The statement of cash flows will show supplies expense of $(1,000).
C)The statement of cash flows will show supplies expense of $(700).
D)This is a trick question.The statement of cash flows will not report anything about any of these events.

Question

Quizplus · Accepted Answer

The statement of cash flows only reports actual cash transactions. Since Clean Sweep, Inc. paid $400 in cash for supplies, this is the only event among those listed that affects the company's cash flow and will be reported as a cash outflow of $400 on the statement of cash flows.