1. A company shows sales of $100,000 during the year. The company's balance in accounts receivable decreased $6,000 during the year. How much cash was received from customers during the year?
a. $98,000
b. $94,000
c. $100,000
d. $106,000
2. A company's balance in inventory is $53,000 at the beginning and end of the year. Its beginning balance in accounts payable is $30,000, and its ending balance is $35,000. Cost of goods sold for the year is $78,000. How much cash was paid for inventory during the current year?
a. $73,000
b. $83,000
c. $78,000
d. $88,000
3. A company's income statement shows insurance expense of $6,000 for the current period. The balance sheet shows that the balance in prepaid insurance increased from $9,000 to $11,000 during the year. How much cash was paid for insurance during the year?
a. $8,000
b. $11,000
c. $9,000
d. $6,000
4. A company's income statement shows salaries expense of $22,000 for the current year. The balance in salaries payable increased $3,000 during the year. How much cash was paid for salaries during the year?
a. $22,000
b. $19,000
c. $25,000
d. $3,000
5. Which of the following would not be reported on a statement of cash flows prepared under the direct method?
a. Cash receipts from customers.
b. Gain on sale of equipment.
c. Cash paid to suppliers.
d. Cash paid for taxes.
6. A company generates net income of $75,000 during the year. In that same year, accounts payable decreased $5,000, inventory decreased by $2,000, and accounts receivable increased by $4,000. Using the indirect method, calculate operating cash flows.
a. $66,000
b. $76,000
c. $68,000
d. $74,000
7. Which of the following would not be an adjustment to net income under the indirect method of calculating operating cash flows?
a. Gain on the sale of equipment
b. An increase in prepaid insurance
c. Depreciation expense
d. Each of the above would be an adjustment under the indirect method
8. When calculating operating cash flows under the indirect method, an increase in a current asset should be _______ to net income and a decrease in a current liability should be ________ to net income?
a. subtracted, added
b. added, subtracted
c. subtracted, subtracted
d. added, added