11 under the direct method paying and collecting interest on loans are activities 12 4351939

11) Under the direct method, paying and collecting interest on loans are __________ activities.

12) When a corporation receives dividends, they are shown as a(n) __________ activity.

13) A company settles a long-term note payable plus interest by paying $68,000 cash toward the principal amount and $5,440 cash for the interest.  Under the direct method of reporting interest, the $5,440 would be listed as a(n) __________ activity.

14) In the direct method of preparing a cash flow statement, interest received and interest expense are in the __________ activities section.

15) Which method of preparing a cash flow statement is preferred according to IFRS and Canadian ASPE?

16) Under the direct method, the only section that differs from the indirect method is the __________ activities section.

17) Dividends received by a company appear in the __________ activities section of a direct method cash flow statement.

18) How would depreciation of factory equipment be reported under the direct method?

19) From the income statement and balance sheet information listed below, what amount of cash is paid for salaries and wages?

Salaries and wages expense  2010

$255,000

Salaries and wages payable  Dec. 31, 2009

8,200

Salaries and wages payable  Dec. 31, 2010

10,900

20) The following information is available for Isaiah Company.  What amount is paid for merchandise for the current year (2010)?

Cost of goods sold

$545,000

Merchandise inventory, 12/31/09

105,000

Merchandise inventory, 12/31/10

112,000

Accounts payable 12/31/09

98,500

Accounts payable 12/31/10

101,300

21) What types of expenses are not reported on the direct method cash flow statement?

22) Why is the direct method preferred over the indirect method?

23) Identify the various sources and uses of cash in preparing the operating activities of the cash flow statement using the direct method.

24) Why is the operating activities section of the direct method cash flow statement just a cash-basis income statement?

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