Reference no: EM132887409

Problem 1: Under the indirect method, which of the following items would be added to profit to arrive at net cash flows from operating activities.

A. decrease in accounts receivable

B. increase in prepaid expenses

C. decrease in deferred revenue

D. gain on sale of investments

Problem 2: Discount amortization on bonds payable

A. deducted from the reported interest expense to arrive at the actual amount of interest expense paid in cash

B. added to the reported interest expense to arrive at the actual amount of interest expense paid in cash

C. bond discount on bonds payable is ignored to arrive at the actual amount of interest expense paid in cash

D. deducted from the reported interest expense to arrive at the actual amount of interest expense paid in cash only if the amount involved is material