CFA Institute CFA-Level-I Exam - Topic 3 Question 26 Discussion

Actual exam question for CFA Institute's CFA-Level-I exam

Question #: 26
Topic #: 3

[All CFA-Level-I Questions]

Tracy company reports the following in its statement of cash flows:

Net Income$1,000

Depreciation and Amortization350

Decrease (Increase) in Accounts receivable(10)

Decrease (increase) in inventory200

Decrease (increase) in prepaid expenses80

Increase (decrease) in trade payables(300)

Increase (decrease) in taxes payable75

Cash Flow from operations1,395

If Tracy shows cost of goods sold of $2,050 on its income statement, cash paid to suppliers is ________.

D$2,150

A$2,650

B$1,550

C$1,950

Show Suggested Answer

Suggested Answer: D

by Sylvia at Jan 27, 2026, 07:43 PM

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Hassie

3 days ago

$2,260 seems like the correct answer. The decrease in inventory of $200 means that $200 less was paid to suppliers, so the total cash paid must be the cost of goods sold ($2,050) plus the decrease in inventory ($200).

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Louis

9 days ago

I think the answer is $2,260. The decrease in inventory of $200 means that $200 less was paid to suppliers, so the total cash paid must be the cost of goods sold ($2,050) plus the decrease in inventory ($200).

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Simona

14 days ago

The cash paid to suppliers is $2,260. The decrease in inventory of $200 means that $200 less was paid to suppliers, so the total cash paid to suppliers must be the cost of goods sold ($2,050) plus the decrease in inventory ($200).

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Stevie

19 days ago

I recall that cash paid to suppliers is COGS plus any changes in inventory and payables, but I’m not confident about how to handle the signs for each adjustment.

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Emerson

24 days ago

Wait, does the decrease in trade payables mean we should add that amount back to COGS? I feel like I mixed that up in my last practice exam.

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Lucina

2 months ago

I think we need to take COGS and add the increase in inventory while subtracting the increase in trade payables. That sounds familiar from practice questions.

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Joanna

2 months ago

I remember we calculated cash paid to suppliers by adjusting COGS for changes in inventory and payables, but I'm not entirely sure about the exact formula.

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Heike

2 months ago

I've got this! The key is to remember that cash paid to suppliers is equal to the cost of goods sold, plus the increase in inventory, minus the increase in accounts payable. I'll work through the numbers step-by-step.

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Elli

2 months ago

This is a good opportunity to demonstrate my understanding of the cash flow statement. I think I can solve this by starting with the cost of goods sold and then adjusting for the changes in inventory and accounts payable.

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Sabra

2 months ago

Hmm, I'm a bit confused on how to approach this. I know I need to use the cost of goods sold and the changes in working capital accounts, but I'm not sure of the exact formula. I'll have to review my notes.

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Lucina

2 months ago

Okay, let me see if I can work this out. I'll need to use the information from the cash flow statement and the cost of goods sold to figure out the cash paid to suppliers.

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Whitney

3 months ago

This looks like a straightforward cash flow question, but I'll need to think through the calculations carefully to get the right answer.

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