1. Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

1. an increase in accrued liabilities
2. a gain on the sale of land
3. a decrease in accounts payable
4. dividends paid on common stock

2. Accounts receivable from sales transactions were $42,000 at the beginning of the year and $59,000 at the end of the year. Net income reported on the income statement for the year was $75,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is

1. $116,000
2. $58,000
3. $134,000
4. $92,000

3. The following information is available from the current period financial statements:

Net Income	$135,000
Depreciation expense	28,000
Increase in accounts receivable	16,000
Decrease in accounts payable	21,000

1. $200,000
2. $126,000
3. $158,000
4. $168,000

4. A building with a book value of $104,000 is sold for $153,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as follows:

1. an increase of $104,000 from investing activities and an addition to net income of $49,000
2. an increase of $104,000 from investing activities
3. an increase of $153,000 from investing activities
4. an increase of $153,000 from investing activities and a deduction from net income of $49,000

5. If a gain of $16,000 is realized in selling (for cash) office equipment having a book value of $64,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

1. $16,000
2. $64,000
3. $48,000
4. $80,000

6. The cost of merchandise sold during the year was $65,000. Merchandise inventories were $13,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $7,000 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

1. $64,000
2. $68,000
3. $65,000
4. $67,000

7. Income tax was $125,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the statement of cash flows using the direct method is

1. $125,000
2. $115,000
3. $195,000
4. $135,000

8. Sales for the year were $1,200,000. Accounts receivable were $150,000 and $110,000 at the beginning and end of the year, respectively. Cash received from customers to be reported on the statement of cash flows using the direct method is

1. $1,310,000
2. $1,240,000
3. $1,160,000
4. $1,350,000

9. Firefly Inc. sold land for $445,000 cash. The land had been purchased five years earlier for $485,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?

1. None of the choices are correct
2. $445,000
3. $40,000
4. $485,000

10. In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is

1. reported supplementally as a noncash investing and financing activity
2. ignored because it does not affect cash
3. deducted from net income
4. added to net income