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1. . Adophus, Inc.'s 2010 income statement reported total revenues of $850,000 and total expenses
   (including $40,000 depreciation) of $720,000. The 2010 balance sheet reported the following:
   accounts receivable beginning balance of $50,000 and ending balance of $40,000; accounts
   payable beginning balance of $22,000 and ending balance of $28,000. Therefore, based only
   on this information and using the indirect method, the 2010 net cash inflow from operating
   activities was
   a. $126,000
   b. $186,000
   c. $166,000
   d. $174,000
2. Tinker Company reported sales revenue of $500,000 and total expenses of $450,000
   (including depreciation) for the year ended December 31, 2010. During 2010, accounts
   receivable decreased by $5,000, merchandise inventory increased by $4,000, accounts payable
   increased by $6,000, and depreciation expense of $10,000 was recorded. Assuming no other
   data is needed and using the indirect method, the net cash inflow from operating activities for
   2010 was
   a. $60,000
   b. $67,000
   c. $44,000
   d. $51,000
3. Which of the following statements about the statement of cash flows is correct?
   a. A purchase of equipment is classified as a cash inflow from investing activities.
   b. Cash dividends paid are classified as cash flows from operating activities.
   c. Cash dividends received on stock investments are classified as cash flows from
   operating activities.
   d. A company with a net loss on the income statement will always have a net cash
   outflow from operating activities.
4. Norton Company reported total sales revenue of $55,000, total expenses of $45,000, and net
   income of $10,000 on its income statement for the year ended December 31, 2010. During
   2010, accounts receivable increased by $4,000, merchandise inventory increased by $6,000,
   accounts payable decreased by $2,000, and depreciation of $18,000 was recorded. Therefore,
   based only on this information, the net cash flow from operating activities using the indirect
   method for 2010 was:
   a. $30,000
   b. $10,000
   c. $16,000
   d. $19,000
5. Krenshaw Company reported total sales revenue of $80,000, total expenses of $72,000, and
   net income of $8,000 for the year ended December 31, 2009. During 2009, accounts
   receivable increased by $3,000, merchandise inventory decreased by $2,000, accounts payable
   increased by $1,000, and $5,000 in depreciation expense was recorded. Assuming no other
   adjustments to net income are needed, the net cash inflow from operating activities using the
   indirect method was
   a. $19,000
   b. $13,000
   c. $10,000
   d. $11,000
6. Which statement is false regarding the preparation of the indirect method of the statement of
   cash flows?
   a. An increase in merchandise inventory is subtracted from net income.
   b. Depreciation expense is added to net income.
   c. An increase in accounts receivable is added to net income.
   d. An increase in accounts payable is added to net income.
7. Lui Company's 2010 income statement reported total sales revenue of $350,000. The 2009-
   2010 comparative balance sheets showed that accounts receivable increased by $20,000. The
   2010 "cash receipts from customers" would be
   a. $270,000
   b. $250,000
   c. $330,000
   d. $40,000
8. Which of the following statements is true?
   a. A cash dividend is an operating cash outflow.
   b. Cash paid to repurchase treasury stock is an investing cash outflow.
   c. Cash paid to acquire stock in another company is a financing outflow.
   d. Purchase of a patent is an investing cash outflow.
9. Which of the following statements is false?
   a. Purchase of equipment is an investing cash outflow.
   b. Sale of equipment creates investing cash outflow equal to its selling price.
   c. Purchase of short-term investments is an investing cash outflow.
   d. Purchase of a patent is an investing cash outflow.