1. A company that had a $500 decrease in accounts receivable during a period would do which of the following on its statement of cash flows prepared using the indirect method?

A. add the $500 to net income in order to arrive at net cash provided by operating activities

B. Subtract the $500 from net income in order to arrive at net cash provided by operating activities

C. Add the $500 to the net cash provided by investing activities

D. Add the $500 to the net cash provided to financing activities.

2. In a statement of cash flows, interest paid to creditors is classified as a cash flow from:

A. Operating activities

B. Trading activities

C. Financing activites

D. Investing activities

3. Excepts from Brown Corporation's comparative balance sheet appear below:

Ending Balance Beginning Balance

Cash and cash equivalents $38,000 $26,000

Accounts payable $18,000 $19,000

Accrued liabilities $19,000 $35,000

Which of the following in the correct treatment within the operating activities section of the statement of cash flows using the indirect method?

A. The change in Accounts Payable is added to net income. The change in Accrued Liabilities is subtracted from net income.

B. The change in Accounts Payable is added to net income. The Change in Accrued Liabilities is added to net income

C. The change in Accounts Payable in Subtracted fro net income. The change in Accrued Liabilities in added to net income.

D. The change in Accounts payable is subtracted from net income. The change in Accrued Liabilities is subtracted from net income.