Which of the following items is not reported in the operating section of the statement of cash flows using the direct method?
A. Cash paid for income taxes.
B. Cash paid to suppliers.
C. Depreciation expense.
D. Cash received from customers.
Answer: C
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A firm's cash flows will differ from net income each period for all of the following reasons except:
a. cash receipts from customers do not necessarily occur in the same period in which a firm recognizes revenues. b. cash expenditures to employees, suppliers, and governments do not necessarily occur in the same period in which a firm recognizes expenses. c. the company is sustaining losses each period. d. cash inflows and outflows that pertain to investing and financing activities do not immediately flow through the income statement.
Plant property taxes are an example of a cost that would be considered to be:
A. Product-related. B. Volume-related. C. Facility-related. D. Batch-related.
When purchases of merchandise are made on account and the perpetual method is used, the transaction would be recorded with the following entry: ________
a. debit Merchandise Inventory, credit Accounts Payable b. debit Accounts Payable, credit Merchandise Inventory c. debit Purchases, credit Sales d. debit Merchandise Inventory, credit Cash
Which of the following is an example of internal transaction?
a. Sale of equipment b. Consumption of supplies c. Repairs of machinery by the garage mechanic d. Issue of shares to the stockholders