When Using the Indirect Method to Calculate and Report Net

When preparing a statement of cash flows on the indirect method, each of the following should be classified as an operating activity cash flow except: A) An increase in accounts receivable. B) A decrease in accounts payable. C) A gain from disposal of a long-term asset D) An increase in prepaid expenses. E) A decrease in accrued expenses payable.

A company's Inventory balance at 12/31/11 was $188,000 and $200,000 at 12/31/10. Its Accounts Payable balance at 12/31/11 was $84,000 and $80,000 at 12/31/10, and its cost of goods sold for 2011 was $720,000. The company's total amount of cash payments for merchandise in 2011 equals: A) $704,000. B) $712,000. C) $720,000. D) $728,000. E) $736,000.