The following information relates to the West Company; Prepaid Insurance, December 31, 2012, $100,000; Prepaid Insurance, December 31, 2013, $120,000; Insurance Expense for 2013, $500,000. What was the amount of cash West paid for insurance premiums during 2013? a. $720,000 b. $600,000 c. $480,000 d. $520,000. What was the amount of cash West paid for insurance premiums during 2013? a. $720,000 b. $600,000 c. $480,000 d. $520,000 The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12, 500 and $10, 500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total a. $49,000 b. $47,000 c. $51,000 d. $53,000 Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as: a. Financing activities b. Investing activities c. Operating activities d. Direct activities The relationship of $800,000 to $200,000 expressed as a ratio is: a. 4:1 b. 8:1 c. 2:1 d. 1:4 The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as: a. solvency and leverage b. solvency and profitability c. solvency and liquidity d. solvency and equity