36-40

The cost of merchandise sold reported on the income statement was $770,000. The A/P balance decreased $44,000, and the inventory balance decreased by $66,000 over the year. What is the amount of cash paid for merchandise?

		$660,000
		$792,000
		$770,000
		$748,000

A coal company invests $16 million in a mine estimated to have 20 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1,000,000 tons of coal are extracted and sold. What is the depletion expense for the first year?

		$800,000
		$320,000
		$80,000
		Cannot be determined from the information provided

A company purchased land for $90,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the cost principle, the cost of land would be recorded at

		$97,000
		$90,000
		$95,000
		$102,000

The indirect method of reporting cash flows from operating activities uses the logic that a change in any balance sheet account can be analyzed in terms of changes in the other balance sheet accounts.

True

False

If you asked your broker to purchase for you a 12% bond when the market interest rate for such bonds was 11%, you would expect to pay less than the face amount for the bond.

True

False