1a. If the prepaid account had beginning and ending balances of $10,000 and $16,000 respectively, how would this change be reflected on an indirect method statement of cash flows?

Less Decrease in Prepaid rent $(6,000)

Add Decrease in Prepaid rent $6,000

Less Increase in Prepaid rent $(6,000)

Add increase in Prepaid rent $6,000

Cash paid for rent $6,000

The amount for rent expense is needed to determine the amount.

1b. Seal and Besties use the allowance method to account for uncollectible accounts receivable. For months they have been trying to collect $20,000 of their accounts receivable and have been unsuccessful. They have finally decided to write-off these receivables. The journal entry to write off these bad receivables will include:

A debit to Bad Debts Expense

A debit to accounts receivable

A debit to allowance for Bad Debts

A debit to Sales Revenue to remove bad sale.

1c. In preparing a statement of cash flows, which of the following transactions would be considered an investing activity?

Purchase of inventory

Sale of property, plant and equipment

Issuance of bonds payable

Sale of capital stock

All of the above

1d. What impact will using an accelerated method have on a company's net income during the early part of the asset's useful life?

Net income will be higher

Net income will be lower

Net income will be the same

It depends on the length of the useful life of the asset.

1e. Which of the following is considered a separate performance obligation?

Up-front registration fees for a gym membership

Extended warranties on electronic products

Quality-assurance warranties on electronic products

All of the above are performance obligations

None of the above are performance obligations