A company purchases $25,000 of inventory in January 20X6, pays for it in March 20X6 and sells them in May 20X6. The accounting period ends on December 31^st. Which of the following statements is correct?

Multiple Choice

• The 20X5 income statement will report the $25,000 as cost of goods sold
• The statement of cash flows for 20X5 will report an operating cash outflow of $25,000
• The company will report accounts payable of $25,000 in 20X6 Balance Sheet
• None of the other alternatives are correct
• The 20X5 Statement of Retained Earnings will not be affected by this transaction