Last year Cumberland Corporation reported a cost of goods sold of $120,000.Inventories increased by $35,000 during the year, and accounts payable increased by $20,000.The company uses the direct method to determine the net cash provided by (used in) operating activities on the statement of cash flows.The cost of goods sold adjusted to a cash basis would be:

A) $135,000
B) $100,000
C) $155,000
D) $105,000

Accounts Payable

The amounts owed by a company to suppliers or creditors for goods and services received but not yet paid for.

Inventories

Inventories consist of raw materials, work-in-progress, and finished goods held by a company during the production and sales process, awaiting sale.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor directly involved in creating the product.