1a. True/False: Under International Financial Reporting Standards, companies are allowed to classify cash paid for interest as either an operating activity or an investing activity.

1b. Gorilla Corp.'s accountant is preparing the statement of cash flows for the year and is trying to figure out from the balance sheet and income statement the amount of accounts receivable that were written-off during the year. If the income statement shows bad debts expense of $20,000 and the balance sheet shows that the allowance for bad debts had beginning and ending balances of $15,000 and $25,000 respectively, what amount of accounts receivable were written of during the year?

$0

$10,000

$15,000

$20,000

$25,000

1c. Which Method, LIFO or FIFO results in cost of goods sold being close to current replacement cost?

FIFO

LIFO

Both methods result in the same ending inventory, so the answer is both.

Both methods result in the same ending inventory, so the answer is neither.

1d. True or False: Companies can choose any inventory cash flow method as long as it accurately describes the actual physical flow of inventory

1e. In preparation for their 2012 financial statements, Octavia and friends discovered an error made in 2009. The error consisted of depreciation expense being overstated by $75,000. If Octavia reports only the current year financial statements, how should Octavia account for the discovered error?

Increase income on the 2011 income statement

Decrease income on the 2011 income statement

Increase beginning retained earnings on the 2011 statement of retained earnings

Decrease beginning retained earnings on the 2011 statement of retained earnings

Since the error happened in 2009, no adjustment is necessary to the 2011 statement of retained earnings.