XYZ Corporation reported a $35,000 increase in inventory and a $7,000 decrease in accounts payable during the year. XYZ's cost of goods sold amounted to $185,000. Under the direct method of reporting cash flows from operating activities, cash payments to suppliers amounted to:
A) $227,000.
B) $213,000.
C) $157,000.
D) $143,000.

Question

Quizplus · Accepted Answer

To calculate cash payments to suppliers, start with the cost of goods sold ($185,000), add the increase in inventory ($35,000), and subtract the decrease in accounts payable ($7,000). This results in $185,000 + $35,000 + $7,000 = $227,000.

XYZ Corporation Reported a $35,000 Increase in Inventory and a $7,000