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d. ________ Purchased $8,800 of merchandise for cash.
e. ________ Received $100,000 from the issuance of common stock.
f. ________ Paid $1,200 of interest on a note payable.
g. ________ Acquired a new laser printer by paying $650.
h. ________ Acquired a $400,000 building by signing a $400,000
mortgage note.
Chapter 1 Exercise 4:
4. Overview of direct and indirect methods
Evaluate the comments that follow as being True or False. If the
comment is false, briefly explain why.
a. Both the direct and indirect methods will produce the same cash
flow from operating activities.
b. Depreciation expense is added back to net income when the
indirect method is used.
c. One of the advantages of using the direct method rather than the
indirect method is that larger cash flows from financing activities will be
reported.