Question 3

Level Up reported the following information for 2016 and 2017:

Accounts payable, 31 December 2016 $50 000

Accounts payable, 31 December 2017 $80 000

Inventory, 31 December 2016 $60 000

Inventory, 31 December 2017 $150 000

Cost of goods sold2017 $1 000 000

Assume that all merchandise purchases are on account. How much cash was paid to suppliers for inventory purchases during 2017?

1. $1 085 000
2. $1 060 000
3. $1 070 000
4. $1 115 000

Question 4:

Which of the following statements is false regarding how the cash flow effects of the changes in the equipment and accumulated depreciation accounts would be reported on a statement of cash flows if the indirect method is used to prepare the operating activities section?

1. The cash paid to purchase equipment would be reported as a cash outflow in the investing activities section
2. Cash proceeds from the sale of the equipment would be reported as a cash inflow in the investing activities section

3. Depreciation expense would be added to total comprehensive income in the operating activities section
4. A loss on the sale of the equipment would be subtracted from total comprehensive income in the operating activities section