Question

A company’s unearned revenue account increased by $1,000 during the year. Which of the following would...

A company’s unearned revenue account increased by $1,000 during the year. Which of the following would appear on the statement of cash flows prepared using the indirect method?


A. A deduction under operating activities
B. A deduction under financing activities
C. An addition under operating activities
D. An addition under financing activities

A company’s taxes payable account decreased by $1,000 during the year. Which of the following would appear on the statement of cash flows prepared using the indirect method?

A. A deduction under investing activities
B. An addition under operating activities
C. A deduction under operating activities
D. An addition under investing activities

Investing activities involve

A. sale of inventory.
B. receipt of interest.
C. investments in assets other than current operating assets.
D. borrowing and repaying of debt.

Investing activities include all of the following except

A. purchases and sales of property and equipment.
B. purchases and sales of another company’s stock.
C. loans made and collected.
D. issuing and repaying debt.


When a company sells equipment for cash, which of the following amounts is reported in the investing section of the statement of cash flows?

A. Gain on sale of equipment
B. Book value
C. Depreciation expense
D. Amount of cash received

Business   Accounting   
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Homework Answers

Answer #1

1.C.An addition under operating activities.

an increase in current liabilities will lead to an addition under operating activities.

2.C.a deduction under operating activities.

a decrease in current liabilities will lead to a decrease in operating activities.

3.investment in assets other than current operating assets.

purchase of fixed assets or long term assets will be classified as investing activities.

4.d.issuing and repaying debt.

issuing and repaying debt will be classified as cash flow from financing activities.

5.D. amount of cash received.

Cash flow statements will present the transactions at cash value.

The cash received from sale of asset will be presented in the investing activities section at actual cash received.

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