Click to watch the Tell Me More Learning Objective 2 video and then answer the questions below. 1. While calculating cash flows from operating activities using the indirect method, which of the following is added to the net income? a. Increase in accounts payable b. Decrease in sundry creditors c. Decrease in common stock d. Increase in inventories 2. Silver Trading Corp. recorded a net income of $200,000 for the year 20X1. For the same period, the company purchased land for $150,000. It sold some of its long term investments for $50,000 during the period. The company also recorded a depreciation of $10,000 on its equipment. Considering the above transactions, Silver's net cash flows from investing activities for the year would be an: a. inflow of $200,000. b. inflow of $50,000. c. outflow of $100,000. d. outflow of $150,000. 3. Wordmill Publications purchased a printing machine for $40,000 on January 1, 20X1. On December 31, 2005, it sold the printing machine for $25,000. The book value of the equipment on the date of sale was $20,000. Assuming that the company used the indirect method while preparing its statement of cash flows, which of the following is true of the treatment of the gain on sale of the printing machine in the cash flow statements? a. The gain of $5,000 is deducted in the financing activities section of the statement of cash flows. b. The gain of $5,000 is added in the operating activities section of the statement of cash flows. c. The gain of 55,000 is added in the cash flows from financing activities section of the statement of cash flows. d. The gain of $5,000 is deducted in the operating activities section of the statement of cash flows. Click to watch the Tell Me More Learning Objective 3 video and then answer the questions below. 1. Which of the following is true of the direct method for preparing a statement of cash flows? a. The direct method computes the operating cash flows by adjusting the net income for items that do not affect cash flows. b. The statement of cash flows is usually less accurate wh c. The direct method adjusts the net income to determine the net cash flows from operating activities. d. The direct method requires that a supplementary schedule reconciling the net income with the net cash from operating activities be provided with the statement of cash flows. 2. For the year 20X1, Sniper Inc. reported sales of $175,000 on its income statement. During the year, accounts receivable decreased by $45,000 and accounts payable decreased by $30,000. The cost of goods sold for the year was $200,000. The company recorded a total depreciation of $15,000. Assuming that the company uses the direct method to determine the net cash flows from operating activities on the statement of cash flows, calculate the cash flows from operating activities. a. Inflow of $15,000 b. Outflow of $10,000 C. Inflow of $10,000 d. Outflow of $15,000