95. Case Company sold land that cost $170,000 for $185,000 cash. Indicate whether each of the following statements is true or false regarding Case's statement of cash flows (SCF).
_____ a) If Case uses the direct method, they would show a $15,000 cash inflow in the operating section of the SCF.
_____ b) Case would show a $170,000 cash inflow in the investing section of the SCF.
_____ c) Case would show a $185,000 cash inflow in the financing section of the SCF.
_____ d) Case would show a $170,000 cash outflow in the investing section of the SCF.
_____ e) If Case uses the indirect method to prepare the statement of cash flows, the gain on the sale of the land would be subtracted in calculating the cash flows from operating activities.
96. Woodstock Company uses the indirect method to prepare its statement of cash flows. Indicate whether each of the following statements is true or false.
_____ a) Depreciation expense would be added to net income when determining the amount of cash flow from operating activities.
_____ b) Losses would be added to net income when determining the amount of cash flow from operating activities.
_____ c) Cash flow from investing activities would be reported the same as if the direct method were used.
_____ d) The amount of net cash flow from operations will be higher than it would be if the direct method were used.
_____ e) With the indirect method, a decrease in accounts receivable is added to net income in calculating the amount of cash flows from operating activities.
97. Indicate whether each of the following statements is true or false.
_____ a) It is possible for a growing business to have substantial earnings, but yet be short of cash.
_____ b) It is possible for a well-established business to report large operating losses, but have positive cash flow from operating activities.
_____ c) A merchandising firm adding new stores must report the additional inventory purchases as investing activities.
_____ d) When equipment is bought to replace old equipment, the transaction is reported as an operating activity.
_____ e) FASB requires companies to disclose significant investing and financing activities even if these transactions do not affect cash.