12 operating expenses other than depreciation for the

12. Operating expenses other than depreciation for the year were $500,000. Prepaid expenses
increased by $17,000 and accrued expenses
decreased by $30,000 during the year. Cash
payments for operating expenses to be reported on the cash flow statement using the
direct method would be:
a. $453,000
b. $513,000
c. $547,000
d. $483,000
ANS: C DIF: 5 OBJ: 04
13. Income tax was $300,000 for the year. Income tax payable was $30,000 and $40,000 at the
beginning and end of the year. Cash payments for income tax reported on the cash flow
statement using the direct
method is:
DIF: 5 OBJ: 04
1
4. Free cash flow is:
DIF: 2 OBJ: 05
1
5. Free cash flow is cash from operations, less cash for:
DIF: 2 OBJ: 05