1. A purchase of new equipment on a note payable under the direct method would b

Question

1. A purchase of new equipment on a note payable under the direct method would be reported:
a. As a separate disclosure as a non-cash transaction b. in the investing section of the cash flow statement c. in the operating section of the cash flow statement d. in the financing section of the cash flow statement

2. An increase in long-term mortgage payable would mean a:
a. Increase in cash flow from investing activities b. decrease in cash flow from investing activities c. increase in cash flow from financing activities d. decrease in cash flow from financing activities

3. A company settles a long-term note payable plus interest by paying $68,000 cash toward the principal amount and $5,440 cash for the interest. Under the direct method of reporting interest, the $5,440 would be listed as a : a. operating activity b. financing activity c. investing activity d. separate disclosure only

Explanation / Answer

1. A purchase of new equipment on a note payable under the direct method would be reported:
a. As a separate disclosure as a non-cash transaction

b. in the investing section of the cash flow statement

c. in the operating section of the cash flow statement

d. in the financing section of the cash flow statement

2. An increase in long-term mortgage payable would mean a:
a. Increase in cash flow from investing activities

b. decrease in cash flow from investing activities

c. increase in cash flow from financing activities

d. decrease in cash flow from financing activities

3. A company settles a long-term note payable plus interest by paying $68,000 cash toward the principal amount and $5,440 cash for the interest. Under the direct method of reporting interest, the $5,440 would be listed as a :

a. operating activity

b. financing activity

c. investing activity

d. separate disclosure only

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