Question Details

Spa Company uses the direct method in determining net cash 



1.	In converting net income to net cash provided by operating activities, under the indirect method:
a.	decreases in accounts receivable and increases in prepaid expenses are added.
b.	decreases in inventory and increases in accrued liabilities are added.
c.	decreases in  accounts payable and decreases in inventory are deducted.
d.	increases in accounts receivable and increases in accrued liabilities are deducted.


	2.	In the Buans Company, land decreased $80,000 because of a cash sale for $80,000, the equipment account increased $35,000 as a result of a cash purchase, and Bonds Payable increased $60,000 from an issuance for cash at face value. The net cash provided by investing activities is
a.	$80,000.
b.	$165,000.
c.	$45,000.
d.	$25,000.


3.	Hogan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $295,000, prepaid expenses increased $23,000, and accrued expenses payable increased $33,000. Cash payments for operating expenses were
a.	$39,000.
b.	$51,000.
c.	$305,000.
d.	$285,000.



4.	Spa Company uses the direct method in determining net cash provided by operating activities. The income statement shows income tax expense $85,000. Income taxes payable were $35,000 at the beginning of the year and $20,000 at the end of the year. Cash payments for income taxes are
a.	$70,000.
b.	$85,000.
c.	$100,000.
d.	$140,000.


5.	When a worksheet is used, all but one of the following statements is correct. The incorrect statement is
a.	Reconciling items on the worksheet are not journalized or posted.
b.	The bottom portion of the worksheet shows the statement of cash flows effects.
c.	The balance sheet accounts portion of the worksheet is divided into two parts:  assets, and liabilities and stockholders' equity.
d.	Each line pertaining to a balance sheet account should foot across.





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