The following items were reported on the balance sheets and income statement for Centerton Inc. ,a service company: $\begin{array}{lr}
\text { Accounts payable, December } 31,2017 & \$ 64,000 \
\text { Accounts payable, December } 31,2018 & 48,000 \
\text { Operating expenses-2018 } & 170,000
\end{array}$What amount would be reported in the Operating Activities section of the statement of cash flows for payments for operating expenses under the direct method?

A)$186,000
B)$154,000
C)$180,000
D)$170,000

Question

The following items were reported on the balance sheets and income statement for Centerton Inc. ,a service company: $\begin{array}{lr}
\text { Accounts payable, December } 31,2017 & \$ 64,000 \
\text { Accounts payable, December } 31,2018 & 48,000 \
\text { Operating expenses-2018 } & 170,000
\end{array}$What amount would be reported in the Operating Activities section of the statement of cash flows for payments for operating expenses under the direct method?

A)$186,000
B)$154,000
C)$180,000
D)$170,000

Quizplus · Accepted Answer

The correct amount is $186,000, calculated by adding the decrease in accounts payable ($64,000 - $48,000 = $16,000) to the operating expenses ($170,000), resulting in $186,000. This reflects the total cash paid for operating expenses.

The Following Items Were Reported on the Balance Sheets and Income