Qtopia Company Uses the Direct Method to Prepare Its Cash

True/False

Qtopia Company uses the direct method to prepare its cash flow statement. It has reported Cost of sales of $70 000 on its income statement for the year 2014. If the balance in the inventory account has gone up by $2 000 during the year, then $2 000 will have to be added to $70 000 as part of the process to calculate payments to suppliers for inventory purchases.