On May 1,Counts,Inc.has a balance of $1,000 in office supplies.During May,the company pays $500 for more supplies.On May 31,the company counts the supplies and finds $200 of supplies remaining.What will the company report on its statement of cash flows for the month of May?

Question

Quizplus · Accepted Answer

The statement of cash flows shows the cash transactions that actually happened during the month. In this case, the company paid $500 for supplies, so that would be reported as "Cash paid for supplies of $(500)" on the statement of cash flows. Option A is incorrect because it incorrectly reports the amount as an expense rather than a cash outflow. Option B is incorrect because it does not reflect the decrease in supplies during the month. Option D is incorrect because it implies that the company owes $500 for supplies, which is not the case.