Question Details

In preparing net cash flow from operating activities 


True or false:
1.	During the year, Income Tax Expense amounted to $30,000 and Income Taxes Payable increased by $4,000; therefore, the cash paid for income taxes was $26,000.


	a2.	In preparing net cash flow from operating activities using the direct method, each item in the income statement is adjusted from the accrual basis to the cash basis.

	a3.	Using the direct method, major classes of investing and financing activities are listed in the operating activities section.


	a4.	During a period, cost of goods sold + an increase in inventory + an increase in accounts payable = cash paid to suppliers.

5.	Operating expenses + an increase in prepaid expenses - a decrease in accrued expenses payable = cash payments for operating expenses.




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