7.An increase in the inventory account of a company from P10,000 at the beginning of the year to P15,000 at the end of the year would be shown on the company's statement of cash flows prepared under the indirect method as:

An an addition to net income of P5,000 in order to arrive at cash flows from operating activities

A deduction from net income of P5,000 in order to arrive at cash flows from operating activities

An addition to net income of P15,000 in order to arrive at cash flows from operating activities

A deduction fromnet income of P10,000 in order to arrive at cash flows from operating activities

8.During the year the balance in accounts payable account decreased by P8,000.In order to adjust the company's net income to a cash basis using the direct method on the statement of cash flows, it would be necessary to:

Deduct the P8,000 from the sales revenue reported on the income statement

Add the P8,000 to the sales revenue reported on the income statement

Deduct the P8,000 from the cost of goods sold reported on the income statement

Add the P8,000 to the cost of goods sold reported on the income statement

9.In a statement of cash flows, a change in prepaid expenses would be classified as:

An operating activity

A financing activity

An investing activity

A noncash item that need not appear on the statement of cash flow

10.An increase in the interest payable account of a company from zero at the beginning of the year, to P1,000 at the end of the year, would be shown on the company's statement of cash flows prepared under the indirect method as:

An addition to net income of P1,000 in order to arrive at cash flows from operating activities

A deduction from net income of P1,000 in order to arrive at cash flows from operating activities

A cash flow of P1,000 under the Investing activities heading

A cash flow of P1,000 under the Financing activities heading

11.Which of the following would be considered a "use" of cash for purposes of constructing a statement of cash flows?

An increase in accounts payable

An increase in prepaid expenses

An increase in accrued liabilities

An increase in accumulated depreciation

12.An increase in the bonds payable account of P200,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as

An addition of P200,000 under investing activities

A deduction of P200,000 under investing activities

An addition of P200,000 under financing activities

A deduction of P200,000 under the financing activities