MULTIPLE CHOICE QUESTIONS: Choose either A, B, C, D 1. Accounts receivable turnover is useful in assessing the profitability of receivables. A) True B) False 2. The statement of cash flows explains the difference between net income, as shown on the income statement, and the net cash flows generated from operations. A) True B) False 3. The loss on disposal of a significant component of a business is disclosed in the statement of retained earnings. A) True B) False 4. Improper recognition of income is not one of the factors affecting the quality of earnings. A) True B) False 5. Each of the following is an adjustment to convert net income to net cash provided by operating activities except A) adding back noncash expenses. B) adding gains and deducting losses. C) analyzing changes to noncash current asset and current liability accounts. D) All of these answer choices are adjustments. 6. Chodron Corporation had net credit sales of $13,000,000 and cost of goods sold of $9,250,000 for the year. The average inventory for the year amounted to $1,250,000. The inventory turnover for the year is A) 7.4 times. B) 10.4 times. C) 3.0 times. D) 1.4 times. 7. Using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations. A) True B) False