Reference no: EM13599837

1. A purchase of new equipment on a note payable under the direct method would be reported:
a. As a separate disclosure as a non-cash transaction

b. in the investing section of the cash flow statement

c. in the operating section of the cash flow statement

d. in the financing section of the cash flow statement

2. Of the following, which is not classified as an investing activity on the statement of:
a. Sale of equipment for cash

b. Purchasing land

c. Collecting the principal on loans

d. Selling goods and services

3. An increase in long-term mortgage payable would mean a:
a. Increase in cash flow from investing activities

b. decrease in cash flow from investing activities

c. increase in cash flow from financing activities

d. decrease in cash flow from financing activities

4. Of the following, which would be added back to net income in the operating section of a cash flow statement using the indirect method?
a. Increase in inventory

b. decrease in accounts payable

c. increase in accounts receivable

d. decrease in prepaid insurance

5. A company settles a long-term note payable plus interest by paying $68,000 cash toward the principal amount and $5,440 cash for the interest. Under the direct method of reporting interest, the $5,440 would be listed as a :

a. operating activity

b. financing activity

c. investing activity

d. separate disclosure only