Question

7. The declaration and payment of a stock dividendwould be reported in which section of the Statement of Cash Flows?

a. Operating Activity

b. Investing Activity

c. Financing Activity

d. Cannot determine based on this information          

e. None of the above

8. Under the indirect method, each of the following is addedto net income in computing net cash provided by operating activities except:

            a.   depreciation expense

            b.   a loss on the sale of equipment

            c.   a gain on sale of land

            d.   the decrease in accounts receivable during the year

            e.    All of the above are added

9. Flynn Co. reported sales of $250,000. If accounts receivable decreased $10,000 during the year:

a.    Sales is greater than cash collected

b.    Cash collected is greater than sales

c.    Cash collect is the same as sales

d.    None of the above

10. Refer to the previous question. The amount of cash collected is:

11. Use the following to determine the cash flows provided by or used in investing activities:

Net income is $145,000, including a gain on the sale of equipment of $5,000.  

The equipment cost $23,000, had a book value of $12,000 at the time of sale, and was sold for $17,000.  

The company purchased land for $25,000

a. net cash provided, $170,000

b. net cash used, $8,000

c. net cash used, $25,000

d. net cash provided, $25,000

e. net cash provided, $23,000

Answer 1

7	The declaration and payment of a stock dividend would be reported in financing activity of the statement of cash flows since it is paid due to financing done by the company
8	Under the indirect method, a gain on sale of land is deducted to net income in computing net cash provided by operating activities
	Hence, the correct answer is Option C
9	If accounts receivable has decreased is means cash collected is greater than sales and hence it is added to operating activity in cash flow
	The correct answer is option B
10	Cash collected would be (250000-10000) = $ 240000
11	Proceeds from equipment			17000
	Purchased land			-25000
	Net cash used			-8000
	The correct answer is Option B