Question

1）In the statement of cash flows, in which section is the cash payment of salaries reported?
A. Operating Activities
B. Investing Activities
C. Financing Activities
D. Schedule of Noncash Transactions
E. None of the above

2）In the statement of cash flows, in which section is the cash payment of dividends reported?
A. Operating Activities
B. Investing Activities
C. Financing Activities

3）In the statement of cash flows, in which section is the cash receipt from the issuance of common stock reported?
A. Operating Activities
B. Investing Activities
C. Financing Activities
D. Schedule of Noncash Transactions
E. None of the above

4）TATEMENT OF CASH FLOW: Company A has net income of 1,000,000, depreciation of 500,000, a decrease in accounts receivable of 300,000 and an increase in accounts payable of 100,000. Using the indirect method, what is the amount for net cash flow from operating activities?
A. 1,900,000
B. 1,700,000
C. 1,500,000
D. 1,100,000
E. None of the above
D. Schedule of Noncash Transactions
E. None of the above

Answer 1

1. Option A Payments towards activities arising due to day operations of a business are reported under operating activities section.

2. Option C Activities which change the capital structure are reported under financing activities section.

3. Option C (same explanation as 2)

4. Option A Cash flows from operating activities = Net income + Depreciation + Decrease in accounts receivable + increase in accounts payable = 1,000,000 + 500,000 + 300,000 + 100,000 = 1,900,000