226 Chapter An example of a cash flow from a financing activity is: a. receipt o

Question

226 Chapter An example of a cash flow from a financing activity is: a. receipt of cash from sale of land b. receipt of cash from collection of accounts receivable c. payment of cash for acquisition of treasury stock d. payment of cash for new machinery 6. 7. Which of the following items appears first on the statement of cash flows prepared using the direct method? a. retained earnings b. cash received from customers c. net income d. depreciation 8. Which of the following would not be considered a noncash investing and financing activity in preparing a statement of cash flows? a. withdrawal of cash by the owner of a business b. issuance of common stock to retire long-term debt c. acquisition of a manufacturing plant by issuing bonds d. issuance of common stock in exchange for convertible preferred stock 9. To convert the cost of merchandise sold as reported on the income statement to cash payments for merchandise, the cost of merchandise sold is increased for the: a. increase in inventories b. increase in accounts payable c. decrease in inventories d. decrease in accounts receivable 10. Cash payments for income taxes are included on the statement of cash flows as: a. financing activities b. investing activities c. operating activities d. nonoperating activities 11. A loss on the sale of land is reflected on the statement of cash flows by a. adding the loss to the book value of the land to determine the cash flow from investing activities operating activities. cash flow from investing activities. b. deducting the loss from net income to determine the cash flow from c. deducting the loss from the book value of the land to determine the d. both b and c

Explanation / Answer

Question no:6 An example of a cash flow from a financial activity Answer is option (c ) payment of cash for acquisition of treasury stock Aquistion of treasury stock is Financial activity, sale of land is investment activity, receipt from accounts receivables are operating activity, payment of cash foe new machinery is investing activity Question :7 Which of the follwing items appear first on the statement of cash flows under direct method Answer is ( b) cash received from customers under direct method cash flow statement ,first it statrts from cash receipts from customer and then after other cash income received Question no:8 Which of the following would not be considered as non cash investing and financing activity in cash flow statement Answer :   option (a) withdrawal of cash by the owner of Business Withdrwal of cash by owner is Finncial activity. Remaining all activities are considered as non cash activities under Investing and financing activities Question 9 to convert the cost of merchandise sold as reported on the income statement to cash payments for merchandise , the cost of merchandise sold is incresed for the Answer is Option (b) increse in account payables if the accounts Paybles are incresed , then cost of goods sold in the income statement incresed for the purpose of cost of goods sold under cash flow statement

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