5. Which of the following activities is a financingactivity?
A. Purchase of land by issuing stock B. Payment of cashdividends C. Purchase of land for cash D. Purchase of inventory forcash
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 netinflow 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. Net income $150,000 Depreciation expense 10,000Increase in accounts receivable 4,000 Decrease in inventory 5,000Increase in accounts payable 8,000 Loss on sale of equipment 7,000The net cash provided by operating activities is: 1. $142,000. 2.$144,000. 3. $160,000. 4. $176,000. 8. Which of the followingstatements is TRUE regarding the indirect method of preparing astatement of cash flows?
A. A decrease in inventory is subtracted from net income. B. Aloss on the sale of an investment is added to net income. C.Depreciation expense is subtracted from net income. D. An increasein wages payable is subtracted from net income.
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 iseasier and less costly to prepare than the indirect method. C. Asupplementary schedule reconciling net income to the cash basismust also be provided. D. All of the statements above arecorrect.
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 creditorC. Purchasing equipment in exchange for a long-term note D. Gain onthe sale of land
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