61. When using the indirect method to prepare the statement of cash flows, a decrease in current liabilities is:
A. subtracted from current liabilities in the cash flows from financing activities section.
B. subtracted from current assets in the cash flows from financing activities section.
C. added to net income in the cash flows from operating activities section.
D. added to inventory purchases in the cash flows from investing activities section.
62. On January 1, 2016, the Colgate Corporation decided to switch from the direct method to the indirect method of preparing the statement of cash flows. Assuming a positive net income figure but a decrease in the cash balance, what can be said about the change in method of preparing the statement?
A. The direct method will yield a larger amount for cash flows from operating activities.
B. The only difference will be in the cash flows from financing activities section.
C. The indirect method will yield a larger amount for cash flows from operating activities.
D. There will be no difference in the totals on the statement of cash flows.
63. Which of the following is a correct statement of one of the rules for converting net income to the cash flow from operating activities using the indirect method?
A. All noncash expenses and losses are subtracted from net income.
B. Increases in current liabilities are added to net income.
C. Increases in current assets are added to net income.
D. Decreases in current assets are subtracted from net income.
64. Which of the following is an
incorrect
statement of one of the rules for converting net income to the cash flow from operating activities using the indirect method?
A. Increases in current assets are subtracted from net income.
B. Decreases in current assets are added to net income.
C. Noncash revenue and gains are added to net income.
D. Increases in current liabilities are added to net income.
65. Which of the following statements best explains the correct handling of depreciation on the statement of cash flows when using the indirect method?
A. Depreciation expense is a noncash expense that is added to net income to derive cash flows from operating activities.
B. Depreciation is subtracted in the cash flows from investing activities section because it reduces the book value of the corresponding plant asset.
C. Depreciation is subtracted from net income because it causes a loss when the related plant asset is sold.
D. Depreciation adds to the company's Cash account to help pay for new equipment.
66. When preparing a statement of cash flows, in which section is it permitted to use either the direct method or the indirect method?
A. Operating activities
B. Investing activities
C. Financing activities
D. All of these answer choices are correct
67. On January 1, 2016, the balance of Jacobs Corporation's Accounts Receivable was $40,000. Sales on account for 2016 amounted to $320,000 and the ending balance of Accounts Receivable was $64,000. What is the amount of cash collected from customers?
A. $296,000
B. $256,000
C. $344,000
D. $360,000
68. Hilliard Company, a small consulting firm, charges all of its operating expenses on Accounts Payable. On January 1, 2016, Hilliard's Accounts Payable balance was $24,000 and, during the year, an additional $216,000 of operating expenses was charged on account. The ending Accounts Payable balance was $72,000. What is the amount of cash paid for expenses during 2016?
A. $264,000
B. $240,000
C. $168,000
D. $64,000
69. If cash from operations was $48,000, cash used for investing activities was ($88,000) and the net change in cash was $96,000, what was cash from/used for financing activities?
A. ($144,000)
B. $48,000
C. $136,000
D. $96,000
70. Which of the following cash transactions would
not
be shown under operating activities?
A. Cash paid for interest
B. Cash paid for dividends
C. Cash received from dividends
D. All of these answer choices would not be shown under operating activities