Qtopia Electric Company uses the direct method to prepare its statement of cash flows.It has reported Cost of Goods Sold of $85,000 on its income statement for the year 2015.If the balance in Accounts Payable,for inventory suppliers only,has gone down by $8,000 during the year,then $8,000 will have to be subtracted from $85,000 as part of the process to calculate payments to suppliers for inventory purchases.

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The change in accounts payable for inventory suppliers only would actually be added to the cost of goods sold in order to calculate the payments to suppliers for inventory purchases. Therefore, $85,000 + $8,000 = $93,000 would be the amount that Qtopia Electric Company would need to pay to suppliers for inventory purchases.

Qtopia Electric Company Uses the Direct Method to Prepare Its