A. must be separately disclosed in the cash fl ow statement under IFRS only.

B. must be separately disclosed in the cash fl ow statement under U.S. GAAP only.

C. are not separately disclosed in the cash fl ow statement under IFRS or U.S. GAAP.

7. Which of the following components of the cash fl ow statement may be prepared under

the indirect method under both IFRS and U.S. GAAP?

A. Operating

B. Investing

C. Financing

8. Which of the following is most likely to appear in the operating section of a cash fl ow

statement under the indirect method under U.S. GAAP?

A. Net income

B. Cash paid for interest

C. Cash paid to suppliers

36 Learning Outcomes, Summary Overview, and Problems

9. Red Road Company, a consulting company, reported total revenues of $100 million,

total expenses of $80 million, and net income of $20 million in the most recent year. If

accounts receivable increased by $10 million, how much cash did the company receive

from customers?

A. $110 million

B. $90 million

C. $30 million

10. Green Glory Corp., a garden supply wholesaler, reported cost of goods sold for the year of

$80 million. Total assets increased by $55 million, including an increase of $5 million in

inventory. Total liabilities increased by $45 million, including an increase of $2 million in

accounts payable. How much cash did the company pay to its suppliers during the year?

A. $90 million

B. $83 million

C. $77 million

11. Purple Fleur S.A., a retailer of fl oral products, reported cost of goods sold for the year of

$75 million. Total assets increased by $55 million, but inventory declined by $6 million.

Total liabilities increased by $45 million, and accounts payable increased by $2 million.

How much cash did the company pay to its suppliers during the year?

A. $85 million

B. $79 million

C. $67 million

12. White Flag, a women ’ s clothing manufacturer, reported wage expense of $20 million.

The beginning balance of wages payable was $3 million, and the ending balance of

wages payable was $1 million. How much cash did the company pay in wages?

A. $24 million

B. $23 million

C. $22 million

13. An analyst gathered the following information from a company ’ s 2004 fi nancial statements

($ millions):

Year Ended 31 December 2003 2004

Net sales 245.8 254.6

Cost of goods sold 168.3 175.9

Accounts receivable 73.2 68.3

Inventory 39.0 47.8

Accounts payable 20.3 22.9

Based only on the information above, the company ’ s 2004 statement of cash fl ows prepared

using the direct method would include amounts ($ millions) for cash received

from customers and cash paid to suppliers, respectively, that are closest to:

Cash Received from Customers Cash Paid to Suppliers

A. 249.7 182.1

B. 259.5 169.7

C. 259.5 182.1

14. Golden Cumulus Corp., a commodities trading company, reported interest expense of

$19 million and taxes of $6 million. Interest payable increased by $3 million, and taxes

payable decreased by $4 million. How much cash did the company pay for interest and

taxes?

A. $22 million for interest and $2 million for taxes

B. $16 million for interest and $2 million for taxes

C. $16 million for interest and $10 million for taxes

15. An analyst gathered the following information from a company ’ s 2005 fi nancial statements

($ millions):

Date: 2016-03-03; view: 928