6. (6 points) A company's operating section of the cash-flow statement appears as follows: Net income 98 Adjustment to reconcile net income to operating cash flows due to an increase) in prepaid rent, which is an asset, during the period (63) Operating cash flow =35 Which one of the following statements best describes the reason for this adjustment? a. The rent expense during the period exceeded the rent paid during the period. ob. The rent expense during the period was less than the rent paid during the period. Coro A 7. (6 points) A company's salary expense is $100, but it pays only $75 in cash as salaries. Assume that the company does not prepay salaries. The company prepares its operating cash flow section in the indirect format. Which one of the following best describes the adjustment to reconcile net income to the operating cash flows? a. $25 to be added due to an increase in salary payable of $25. ob. $25 to be subtracted due to a decrease in salary payable of $25. C. $100 to be added because a salary expense of $100 does not necessarily imply a cash payment of $100. d. $75 to be subtracted because $75 in salaries paid does not imply a salary expense of $75. oe. None of the above. 8. (6 points) InvestorCo buys some shares of InvesteeCo by paying $100 in cash to InvesteeCo. If InvestorCo does NOT account for these shares as trading securities, which one of the following statement describes the impact of this transaction on the cash-flow statements of InvestorCo and InvesteeCo? a. InvestorCo will show a financing cash outflow of $100, and InvesteeCo will show a financing cash inflow of $100. b. InvestorCo will show a financing cash outflow of $100, and InvesteeCo will book an investing cash inflow of $100. C. InvestorCo will show an investing cash outflow of $100, and InvesteeCo will show a financing cash inflow of $100. d. InvestorCo will show an investing cash outflow of $100, and InvesteeCo will book an investing cash inflow of $100. oe. None of the above. 9. (6 points) BCo takes a loan for $100 from a bank to buy a piece of equipment for $100 from a manufacturer. BCo treats the equipment as a long-term asset held for use; i.e., it did not buy the equipment with a view to reselling it. Which one of the following best describes the effect of these two transactions on the individual SECTIONS of the cash-flow statement? a. BCo's cash-flow statement will show nothing related to these transactions because the cash received from one party has been paid to the other with no net impact on the cash flow. ob. BCo will show a financing inflow of $100 and an investing outflow of $100. C. BCo will show a financing inflow of $100 and an operating outflow of $100. d. BCo will show an investing inflow of $100 and an investing outflow of $100. e. BCO will show an investing inflow of $100 and a financing outflow of $100. 10. (6 points) Which one of the following best describes the adjustment for gains on the sale of property, plant, and equipment in the indirect format of the operating cash flow section? oa. No adjustment for gain on sale of PP&E is necessary if the PP&E is sold for cash. ob. Again on sale of PP&E is shown as a positive adjustment in the operating cash flow section because the gain represents operating cash inflows that are not included in net income. c. Again on sale of PP&E is shown as a negative adjustment in the operating cash flow section because the gain is included in net income, but the cash received from sale of PP&E is included in the investing section, not the operating