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Greene Electric Company uses the direct method to prepare its statement of cash flows. Greene has...

Greene Electric Company uses the direct method to prepare its statement of cash flows. Greene has reported cost of goods sold of​ $85,000 on its income statement for 2018. If the balance in Accounts​ Payable, for merchandise inventory suppliers​ only, has decreased by​ $8,000 during the​ year, then​ $8,000 needs to be subtracted from​ $85,000 to calculate payments to suppliers for merchandise inventory purchases.

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Answer #1

Payment of suppliers for merchandise purchase = Cost of goods sold+Increase inventory-Increase account payable

So if account payable is increase it should be deducted and account payable decrease it should be added

So above statement is false

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