1. Which of the following is reported as an operating activity in the statement of cash flows? (Points : 4) a.) The purchase of long-lived assets b.) The acquisition of treasury stock c.) The retirement of bonds d.) The payment of prepaid insurance 2. Using the direct method, cash received from customers is calculated as sales (Points : 4) a.) plus an increase in allowance for uncollectible accounts. b.) minus an increase in allowance for uncollectible accounts. c.) plus an increase in accounts receivable. d.) plus a decrease in accounts receivable. 3. Which of the following is not reported as an adjustment to net income when using the indirect method of computing net cash flows from operating activities? (Points : 4) a.) Cash dividends paid b.) A change in accounts receivable c.) Depreciation d.) A change in a prepaid expense 4. Which of the following is reported as a deduction from net income when using the indirect method to determine net cash flows from operating activities? (Points : 4) a.) Depreciation expense b.) A bad debt written off under the allowance method c.) Amortization of premium on bonds payable d.) Dividends declared 5. Each year, White Mountain Enterprises (WME) prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2011 income statement, WME reported $695,000 for service revenue earned from membership fees. WME received $681,000 cash in advance from members during 2011. In its reconciliation schedule, WME should (Points : 4) a.) show a $14,000 negative adjustment to net income under the indirect method for the increase in unearned revenue. b.) show a $14,000 negative adjustment to net income under the indirect method for the decrease in unearned revenue. c.) show a $14,000 positive adjustment to net income under the indirect method for the increase in unearned revenue. d.) show a $14,000 positive adjustment to net income under the indirect method for the decrease in unearned revenue