Use the information below to answer the following question(s):Howard Co. uses the direct method to prepare its operating activities section of the statement of cash flows. Indicate how each event affects net income and the three types of activities on the statement of cash flows. In the net income column, use the letter "I" to indicate increase, the letter "D" to indicate decrease, and the letters "NA" to indicate no effect on net income. In the three cash flow columns, use the letter "I" to indicate cash inflow, the letter "D" to indicate cash outflow, and the letters "NA" to indicate no effect on cash flows.Howard Co. purchased $4,000 of supplies, paying $1,500 in cash and charging the remainder on account. $1,600 of the supplies were used during the accounting period. (Show the
combined effects of the events.)
What will be an ideal response?
(D) (D) (NA) (NA)
The $1,500 paid for the supplies purchase is a cash outflow in the operating activities section of the statement of cash flows. The $2,400 supplies expense for the supplies used reduces net income.
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