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Preparing a statement of cash flows

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When preparing a statement of cash flows, a decrease in prepaid insurance during a period would require which of the following adjustments in determining cash flows from operating activities?

Indirect Method Direct Method
a. Increase Decrease
b. Decrease Increase
c. Increase Increase
d. Decrease Decrease

In January 2004, Pace, Inc. estimated that its year-end bonus to executives would be $480,000 for 2004. The actual amount paid for the year-end bonus for 2003 was $440,000. The estimate for 2004 is subject to year-end adjustment. What amount, if any, of expense should be reflected in Pace's quarterly income statement for the three months ended March 31, 2004?

a. $ -0-.
b. $110,000.
c. $120,000.
d. $480,000.

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