Reference no: EM132359619

Question

1. Which of the following is an investing activity

Issuing

a loan in cash

Issuing bonds for cash

Obtaining a loan in cash.

Receiving a dividend from your investment in another company.

2. When preparing a Statement of Cash Flows under the indirect method, how does a company account for depreciation expense?

It does not make any adjustments for depreciation expense for the period.

It adds the depreciation expense for the period to the investing section.

It deducts the depreciation expense for the period from the operating section

It adds the depreciation expense for the period to the operating section.

It deducts the depreciation expense for the period from the investing section

3. Marshall Company issued $250,000 stock in exchange for a piece of land. How would Marshall report this transaction on the Statement of Cash Flows?

This transaction would not be reported on the Statement of Cash Flows.

Half of the amount would be reported as a cash inflow for financing activities and half would be reported as a cash outflow for investing activities.

As a cash outflow for investing activities

As a cash inflow for financing activities

4. Which section of the balance sheet corresponds with the Financing Section of the Statement of Cash Flows?

Long-term Liabilities and Stockholders' Equity

Items from all of the sections of the Balance Sheet are reported in the Financing Section of the Statement of Cash Flows.

Current Assets and Current Liabilities

Long-term Assets

5. How would a company record the purchase of $30,000 of Treasury Stock on the Statement of Cash Flows?

As a cash inflow for investing activities

As a cash outflow for financing activities

As a cash inflow for financing activities

As a cash outflow for investing activities

This transaction would not be reported on the Statement of Cash flows.

6. When preparing the Statement of Cash Flows under the direct method, how do we determine the payment from suppliers?

None of these answers are correct.

Purchases - Ending Inventory + Beginning Inventory + Beginning Accounts Payable - Ending Accounts Payable.

Purchases + Ending Inventory - Beginning Inventory + Beginning Accounts Payable - Ending Accounts Payable.

Purchases - Ending Inventory + Beginning Inventory - Beginning Accounts Payable + Ending Accounts Payable

7. Which of the following would NOT be reported in the Operating Section of the Statement of Cash Flows when using the Indirect Method?

Interest paid on a note

Loss on sale of equipment

Dividends paid

Dividends received