1. When using the direct method to prepare the statement of cash flows, two adjustments must be made to cost of goods sold to calculate cash paid to suppliers. Which of the following correctly explains the two adjustments?

Group of answer choices

Decreases in inventory are added to cost of goods sold and decreases in accounts payable are added to cost of goods sold.

Increases in inventory are added to cost of goods sold and increases in accounts payable are deducted from cost of goods sold.

Increases in inventory are deducted from cost of goods sold and increases in accounts payable are deducted from cost of goods sold.

Decreases in inventory are deducted from cost of goods sold and decreases in accounts payable are deducted from cost of goods sold.

None of the answer choices is correct.

1. Free cash flow measures:

Group of answer choices

the company's ability to generate enough cash from investing activities to cover capital expenditures, and determines how much cash is remaining to invest elsewhere in the company.

the company's ability to generate enough cash from daily operations to cover capital expenditures, and determines how much cash is remaining to invest elsewhere in the company.

the company's ability to generate enough cash from daily operations to cover current liabilities.

the company's ability to generate enough cash from financing operations to cover current liabilities.

None of the answer choices is correct

1. If a company purchases land with its common stock, and no cash changes hands, where would this activity be presented on the statement of cash flows?

Group of answer choices

The financing section of the statement of cash flows.

The investing section of the statement of cash flows.

The operating section of the statement of cash flows.

A note below the statement of cash flows.

None of the answer choices is correct.

1. Which of the following is not an advantage of using the indirect method to prepare the statement of cash flows?

Group of answer choices

The indirect method provides a link between net income and cash flows from operating activities by reconciling the two amounts.

The indirect method typically takes less time to prepare than the direct method. .

Accounting systems are better suited to generate information needed for the indirect method.

The indirect method is more accurate than the direct method.

None of the answer choices is correct.

1. Using the indirect method for preparing the statement of cash flows, which of the following wouldnotbe included as an adjustment to net income?

Group of answer choices

A decrease in Prepaid Insurance.

An increase in Accounts Payable.

An increase in Equipment.

An increase in Accounts Receivable.

None of the answer choices is correct.

1. The bottom of the statement of cash flows shows a net increase in cash of $350,000. What is this increase linked to elsewhere in the financial statements?

Group of answer choices

The income statement.

The statement of owners' equity.

The balance sheet.

The income statement, the balance sheet, and the statement of owners' equity.

None of the answer choices is correct.

1. Which of the following are the three major categories of activities included in the statement of cash flows?

Group of answer choices

Financing, investing and purchasing.

Operating, capital, and financing.

Operating, investing, and financing.

Investing, operating and capital.

None of the answer choices is correct.

1. If cash is paid to purchase a factory building, in which section of the statement of cash flows would this appear?

Group of answer choices

Operating activities section.

Investing activities section.

Financing activities section.

Capital activities section.

None of the answer choices is correct.

1. Where would cash payments for insurance appear in the statement of cash flows?

Group of answer choices

Operating activities section.

Financing activities section.

Investing activities section.

Capital activities section.

None of the answer choices is correct.

1. With respect to the statement of cash flows, activities that affect common stock accounts are referred to as:

Group of answer choices

capital activities.

operating activities.

investing activities.

financing activities.

None of the answer choices is correct.