xYZ Corp Income Statement For the year ended December 31, 2010 Sales Cost of goods sold Gross profit $6,000,000 2,600,000 expenses Selling expenses 800,000 400,000 Administrative expenses Operating income Interest expense Income tax expense Net income 1,400,000 70,000 s 1,270,000 ADDITIONAL INFORMATION 1. Accounts receivable decreased $400,000 during the year. 2. Prepaid expenses decreased $100,000 during the year 3. Accounts payable to suppliers of merchandise decreased $350,000 during the year. 4. Inventory increased $300,000 during the year 5. Accrued expenses payable increased $ 200,000 during the year. 6. Administrative expenses include depreciation expense of $250,000 7. Taxes payable decreased $25,000 during the year. Required : Prepare the Operating Activities section of Statement of Cash Flows using the Direct method. b , 650,000 $ c. $800,000 d. $150,000. 16 When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is added to net income to compute cash provided bylused by operating activities? a. Amortization of patent. b. Gain on sale of land. c. Increase in accounts receivable. d. All of the above are added to net income to arrive at cash flow from operating activities. 17 When preparing a statement of cash flows, a decrease in prepaid insurance during a period would require which of the following adjustments in determining cash flows from operating activities? Indirect Method Direct Method a. ncrease b. Decrease c. Increase d. Decrease increase increase Decrease Decrease 18.A company borrows $10,000 and signs a 90-day nontrade note payable. in preparing statement of cash flows (indirect method), this event would be refiected as a(n) a. addition adjustment to net income in the cash flows from operating activities section b. cash outflow from investing activities. c. cash inflow from investing activities. d. cash inflow from financing activities