1. When completing the spreadsheet to prepare the statement of cash flows, an increase in retained earnings due to net income would require an entry on the work sheet involving a

a.debit to Operating ActivitiesNet Income.

b.credit to Operating ActivitiesNet Income.

c.debit to Retained Earnings.

d.debit to Financing ActivitiesNet Income.

2. When preparing its statement of cash flows, Simon Says Games, Inc., reported net income of $86,000, a decrease in accounts receivable of $24,200, an increase in mortgage note payable of $430,000, and an increase in depreciation expense of $25,300. The Financing Activities section of the statement of cash flows would show net cash flows of

a.$(344,000).

b.$(430,000).

c.$430,000.

d.$(342,900).

3. Income tax was $207,000 for the year. Income tax payable was $30,100 and $40,300 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 total

a.$207,000.

b.$196,800.

c.$237,100.

d.$217,200.

4. Which of the following is the starting point in computing net cash flows from operating activities using the direct method?

a.Cash at the beginning of the year

b.Net income

c.Cash payments for merchandise

d.Cash received from customers

5. A spreadsheet __________ used in preparing the statement of cash flows.

a.cannot be

b.is required by the FASB to be

c.may be

d.must be

6. Which of the following would be found in the Investing Activities section of the statement of cash flows?

a.Land

b.Dividends

c.Loss on sale of building

d.Gain on sale of land