1.

Which of the following is true regarding operating cash flows?

a. Cash sales and customer collections on accounts receivable are included in the amount reported as

operating cash flows.

b. Specific amounts of cash receipts and cash payments will be reported as operating activities using the

direct method.

c. If cash received from customers differs from the amount of sales revenue reported in the income

statement, the difference will be reported as an adjustment to net income using the indirect method.

d. All of the above.

e. None of the above.

2.

Current liabilities include:

a. Unearned revenues

b. Payroll tax liabilities

c. Accounts payable to suppliers

d. Interest payable

e. All the above

3.

Cost of goods sold equals the cost of merchandise:

a. Purchased this year, whether with cash or by credit

b. Purchased with cash this year

c. Sold to the customers this year for which cash payment has been received

d. Sold to the customers this year