To produce a cash flow income statement, the direct method calculates operating cash flows by:

a.adjusting net income for noncash items.

b.adjusting each line of the income statement.

c.adjusting the income statement for changes only in current liabilities.

d.adjusting net income for changes in all the current assets.

Which of the following is an example of a cash equivalent?

a.A patent

b.A long-term investment

c.A money market fund

d.A prepaid expense

Following is the financial information of Merry Company for the year ended December 31, 20X1. Compute net cash from financing activities.

Net Income for the year	$198,000
Payment of dividends	48,000
Issuance of share capital	98,000
Purchase of equipment	150,000

a.$150,000

b.$98,000

c.$52,000

d.$198,000

Consider the following information for Rhombus Company:

Cash receipts from customers	$448,000
Cash paid to suppliers	228,000
Cash paid to employees	113,000
Gain on sale of equipment	51,000
Depreciation for the year	20,000
Income tax paid	80,000

Calculate cash from operating activities using the direct method.

a.$78,000

b.$36,000

c.$56,000

d.$27,000