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#1) If Cost of goods sold is $146,000 and the beginning and ending Inventory balances are $18,500 and $13,500, respectively, inventory purchases equal:

A $151,000

B $141,000

C $146,000

D $132,500

#2) If Sales are $850,000 and the beginning and ending balances of Accounts Receivable are $43,000 and $48,000, respectively, the cash collected from customers is:

A - $850,000.

B - $802,000.

C - $845,000.

D - $855,000.

#3) The T-account approach:

A - may be used with the direct method.

B - creates one big T-account for cash that replaces separate schedules to show all the changes in the cash account.

C - shows cash provided as credits and cash used as debits.

D - does not determine the change in each balance sheet account.

#4) Which of the following statements about preparation of the statement of cash flows is correct?

A - GAAP allows the indirect method only.

B - GAAP allows the direct method only.

C- GAAP allows either the indirect or direct method.

D - Although GAAP allows either method for the preparation of the operating activities section of the statement of cash flows, the indirect method must be used to prepare the investing activities section of the statement of cash flows.

#5) If Salaries and Wages Expense is $450,000 during the year and the beginning and ending balances of Salaries and Wages Payable are $18,000 and $16,500, respectively, the cash paid to employees is:

A - $450,000.

B - $433,500.

C - $448,500.

D - $451,500.

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