9.1 20pts

1. Cost of merchandise sold for the year was $850,000. Inventories were $60,000 and $120,000 at the beginning and end of the year, respectively. There were no changes in accounts payable from the beginning to the end of the year. Cash payment for merchandise to be reported on the cash flow statement using the direct method is:

A.$850,000.

B.$910,000.

C.$940,000.

D.$880,000.

2. The accuracy of the statement of cash flows, regardless of method used, can be verified by computing the change in the balance of:

A.cash.

B.equity.

C.revenue.

D.liabilities.

3. When using the direct method to determine the net cash flows from operating activities, major categories would include:

A.Cash received from bank.

B.Cash paid for salaries.

C.Cash paid for dividends.

D.Cash paid for equipment.

4. The method of reporting cash flows from operating activities under which revenues and expenses on the income statement are adjusted to reflect the amount of cash received or expended for each item is the:

A.direct method.

B.indirect method.

C.combination method.

D.adjustment method.

5. Which of the following is a cash flow from investing activities?

A.Receiving cash from a bank

B.Payment of cash dividends

C.Sale or purchase of land

D.Cash received from customers.

6. Generally Accepted Accounting Principles prefer which method of computing cash flow from operating activities?

A.Combination method

B.Direct method

C.Indirect method

D.Adjusting method

7. Operating expenses other than depreciation expense for the year were $335,000. Prepaid expenses increased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

A.$335,000.

B.$342,000.

C.$328,000.

D.$7,000.

8. If $15,000 was generated from operations, $7,000 was used for investing activities, and $6,000 was provided by financing activities, the cash balance would:

A.increase by $14,000.

B.decrease by $20,000.

C.increase by $10,000.

D.increase by $2,000.

9. Which would go into the operating activities section of a statement of cash flows using the direct method?

A.Depreciation expense

B.Cash paid for inventory

C.Selling of plant, property and equipment

D.All of the above

10. Operating expenses other than depreciation expense for the year were $400,000. Accrued expenses payable decreased by $35,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

A.$400,000.

B.$435,000.

C.$365,000.

D.$35,000.