5. Which of the following activities is a financingactivity?
A. Purchase of land by issuing stock
B. Payment of cash dividends
C. Purchase of land for cash
D. Purchase of inventory for cash
6. On a statement of cash flows, the net increase in cash was$24,000. Cash provided from operations was $30,000. If the net cashoutflow from investing activities was $7,000, then what was the netcash flow from financing activities?
A. A net inflow of $1,000
B. A net outflow of $1,000
C. A net inflow of $13,000
D. A net outflow of $13,000
7. Using the following information for Stewart Auto, Inc.,calculate the net cash flow from operating activities using theindirect method.
Netincome $150,000
Depreciationexpense 10,000
Increase in accountsreceivable 4,000
Decrease ininventory 5,000
Increase in accountspayable 8,000
Loss on sale ofequipment 7,000
The net cash provided by operating activities is:
A. $142,000.
B. $144,000.
C. $160,000.
D. $176,000.
8. Which of the following statements is TRUE regarding theindirect method of preparing a statement of cash flows?
A. A decrease in inventory is subtracted from net income.
B. A loss on the sale of an investment is added to netincome.
C. Depreciation expense is subtracted from net income.
D. An increase in wages payable is subtracted from netincome.
9. Which of the following statements is TRUE regarding thedirect method of preparing a statement of cash flows?
A. Depreciation expense is added as a reconciling item.
B. It is easier and less costly to prepare than the indirectmethod.
C. A supplementary schedule reconciling net income to the cashbasis must also be provided.
D. All of the statements above are correct.
10. Which of the following is an example of noncash investingand financing activity that is disclosed in a supplementaryschedule accompanying the statement of cash flows or in a footnoteto the financial statements?
A. Selling goods on credit
B. Paying the amount due a creditor
C. Purchasing equipment in exchange for a long-term note
D. Gain on the sale of land
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