Cash dividends declared in the current year and paid in the next year are recorded as a cash payment in

a.financing activities in the current year.

b.operating activities in the current year.

c.financing activities in the year paid.

d.investing activities in the year paid.

Which of the following would be added to net income in computing cash flows from operating activities?

a.An increase in accounts receivable

b.An increase in inventories

c.A decrease in accrued expenses

d.A decrease in prepaid expenses

During the year, Michael Company paid $10,000 to retire bonds with a face value of $11,000 and a book value of $10,700. Michael Company recorded the following entry at the time of the retirement:

Bonds Payable	11,000
Discount on Bonds Payable		300
Cash		10,000
Gain on Retirement of Bonds Payable		700

The cash paid of $10,000 is a cash payment for a(n) __________ activity and the gain decreased __________ activities.

a.investing; operating

b.operating; financing

c.financing; operating

d.financing; investing

Which of the following is not a category of operating cash flows?

a.Payments to employees

b.Payment of bonds

c.Payment of interest taxes

d.Collections from customers

Which of the following items would be deducted from net income to determine net cash provided by operating activities using the indirect method?

a.Loss on sale of plant assets and amortization of bond payable discount

b.Amortization of bond payable premium and gain on sale of equipment

c.Amortization expense and gain on sale of equipment

d.Decrease in income taxes payable and amortization of goodwill

In the statement of cash flows, depreciation is a(n)

a.increase to net income in the operating section.

b.deduction from net income in the operating section.

c.increase in cash flow in the investing section.

d.decrease in cash flow in the investing section.