(Multiple Choice)
1. Paying off bonds payable is reported on the statement of cash flows under
a. financing activities.
b. non-cash investing and financing activities.
c. operating activities.
d. investing activities.

2. The sale of inventory for cash is reported on the statement of cash flows under
a. investing activities.
b. non-cash investing and financing activities.
c. operating activities.
d. financing activities.

3. Selling equipment is reported on the statement of cash flows under
a. financing activities.
b. non-cash investing and financing activities.
c. operating activities.
d. investing activities.

4. Which of the following terms appears on a statement of cash flows—indirect method?
a. Collections from customers
b. Depreciation expense
c. Payments to suppliers
d. Cash receipt of interest revenue

5. On an indirect method statement of cash flows, an increase in a prepaid insurance would be
a. deducted from net income.
b. added to increases in current assets.
c. added to net income.
d. included in payments to suppliers.

6. On an indirect method statement of cash flows, an increase in accounts payable would be
a. added to net income in the operating activities section.
b. reported in the financing activities section.
c. deducted from net income in the operating activities section.
d. reported in the investing activities section.

7. On an indirect method statement of cash flows, a gain on the sale of plant assets would be
a. reported in the investing activities section.
b. ignored, since the gain did not generate any cash.
c. deducted from net income in the operating activities section.
d. added to net income in the operating activities section.

8. Select an activity for each of the following transactions:
1. Paying cash dividends is a/an ___________ activity.
2. Receiving cash dividends is a/an ___________ activity.

9. Photosmart Camera Co. sold equipment with a cost of $18,000 and accumulated depreciation of $6,000 for an amount that resulted in a gain of $4,000. What amount should Photosmart report on the statement of cash flows as “proceeds from sale of plant assets”?
a. $16,000
b. $12,000
c. $8,000
d. Some other amount

10. Income Tax Payable was $5,000 at the end of the year and $2,600 at the beginning. Income tax expense for the year totaled $58,900. What amount of cash did the company pay for income tax during the year?
a. $56,500
b. $58,900
c. $61,300
d. $61,500