I._True or False ( 40 points ) 1. Inventory costs under variable costing include only direct materials, direct labor, and variable factory overhead. 2. A statement of cash flows indicates the sources and uses of a rm's cash during a period. 3. The amount for "net cash from operating activities" will be different depending on if the direct method or the indirect method is used to construct the statement of cash flows. . Transactions that involve the acquisition or sale of long-term assets are generally classied as investing activities on the statement of cash flows. . Investments in stock are reported as an investing activity on the statement of cash flows. . Cash inows that enter into the determination of net income are classified as operating activities on a statement of cash flows. \\Jonms . In the Statement of Cash Flow, payment of interest on loans for business expansion is under nancing activities 8. A primary purpose of vertical analysis is to observe trends over a three-year penod 9. In vertical analysis of a balance sheet, the base for all items on the balance sheet is total assets. 10. The use of common-size analysis makes comparisons more meaningful because percentages eliminate the effects of size. 11. Horizontal analysis involves comparing two or more years' financial data for a single company 12. Liquidity ratios measure the ability of a company to meet its current obligations. 13. The current ratio is a measure of the ability of a company to pay its short-term liabilities out of short-term assets. 14. The inventory turnover ratio measures the number of days the average balance of accounts receivable is outstanding before being converted into cash. 15. The quick ratio should be larger than the current ratio. 16. The inventory turnover ratio measures the number of times the average inventory turns over or was sold during the period 17. All debt is considered in the computation of the quick ratio. 18. When computing the quick ratio, a short-term note receivable would be included. 19. Jill's Market has an inventory turnover of 120 times. Scott's Market has a turnover of 128 times. Scott's is more effective in managing inventory 20. The dividend payout ratio is equal to common dividends divided by (Net Income minus Preferred Dividends)