Question :
61. Which of the following not an adjustment when arriving at : 1208126
61. Which of the following is not an adjustment when arriving at net cash provided by operating activities under the indirect method?
A. Noncash expenses such as depreciation expense
B. Gains and losses on the sale of long-term assets
C. Changes in noncash current asset and current liability accounts
D. Changes in a company’s long-term assets
62. Under the direct method, which of the following would not be included in the operating section of the cash flow statement?
A. Cash payments for income taxes
B. Cash payments to purchase insurance
C. Cash payments to purchase long-term equipment
D. Cash receipts from customers
63. When using the indirect method to complete the cash flows from operating activities section, what is the proper treatment for an increase in the accounts receivable balance?
A. Add the increase to net income
B. Deduct the increase from net income
C. Add the increase to cash collections from customers
D. Add the increase to cash payments to suppliers
64. When using the indirect method to complete the cash flows from operating activities section, what is the proper treatment for a decrease in the inventory account?
A. Deduct the increase from net income
B. Add the increase to net income
C. Add the increase to cash collections from customers
D. Deduct the increase to cash payments to suppliers
65. Which of the following would be shown as a deduction from net income when calculating net cash flow from operating activities using the indirect method?
A. Decrease in accounts receivable
B. Gain on the sale of equipment
C. Decrease in accounts payable for inventory purchases
D. Increase in salaries payable
66. Equipment with an original cost of $40,000 and accumulated depreciation of $15,000 was sold at a loss of $5,000. As a result of this transaction, cash would:
A. Increase by $40,000.
B. Decrease by $15,000.
C. Increase by $20,000.
D. Decrease by $5,000.
67. Which of the following statements is incorrect regarding the use of the indirect method when preparing the operating activities of the statement of cash flows?
A. A decrease in accounts payable is deducted from net income
B. A decrease in prepaid insurance is deducted from net income
C. Gain on the retirement of bonds is deducted from net income
D. Depreciation expense is added to net income
68. All of the following are deducted from net income when preparing the statement of cash flows under the indirect method except:
A. Decrease in accounts payable.
B. Decrease in accrued liabilities.
C. Increase in accounts payable.
D. Increase in inventory.
69. All of the following are additions to net income when preparing the statement of cash flows under the indirect method except:
A. Losses on sales of long term assets.
B. Increase in accounts payable.
C. Decrease in prepayments.
D. Increase in accounts receivable.
70. Where is the gain resulting from the sale of equipment shown when using the indirect method to prepare the cash flow statement?
A. In the investing section as a deduction
B. In the operating section as a deduction
C. In the operating section as an addition
D. In the investing section as a deduction
