# Question & Answer: cost of goods sold of \$110,000. Inventories increased by \$30,000 during the year, and accounts payable decreased b…..

Last year Maine Company reported cost of goods sold of \$110,000. Inventories increased by \$30,000 during the year, and accounts payable decreased by \$15,000. The company uses the direct method to determine the net cash flows from operating activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would be:

a.\$155,000.

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b.\$140,000.

c.\$125,000.

d.\$65,000.

The correct answer is a. \$ 155,000

Note :

Cost of Goods Sold = \$ 110,000

Add: Inventories increased = \$ 30,000

Add: accounts payable decreased = \$ 15,000

cost of goods sold adjusted to a cash basis = \$ 155,000