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| 1.
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Which of the following activities is an operating activity? |
| | A) | issuing shares for a building |
| | B) | redemption of bonds at maturity |
| | C) | collecting the interest on an investment |
| | D) | purchasing the common shares of another corporation as an investment |
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| 2.
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Which of the following activities would not be reported as an investing activity on a statement of cash flows? |
| | A) | collection of a loan made to an officer of the company |
| | B) | purchase of a patent from an inventor |
| | C) | sale of a plant asset at a price equal to its book value |
| | D) | cash dividends received from an investment made in another company |
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| 3.
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Centennial Company purchases equipment for $15,000 by paying cash of $7,000 and writing a long-term note payable of $8,000. Which of the following is the correct way of recording the purchase? |
| | A) | Recording a $15,000 cash outflow in the investing activities in the Cash Flows Statement. |
| | B) | Recording $7,000 cash outflow in the investing activities in the Cash Flows Statement. |
| | C) | Recording $8,000 cash inflow in the investing activities in the Cash Flows Statement. |
| | D) | Recording $8,000 cash inflow in the financing activities in the Cash Flows Statement. |
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| 4.
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Centennial Company purchases equipment for $15,000 by paying cash of $7,000 and writing a long-term note payable of $8,000. Which of the following is the correct way of recording the purchase? |
| | A) | Recording $15,000 cash outflow in the investing activities in the Cash Flows Statement. |
| | B) | Recording $8,000 cash inflow in the investing activities in the Cash Flows Statement. |
| | C) | Recording $8,000 in the non-cash investing and financing activities in the Cash Flows Statement. |
| | D) | Recording $8,000 cash inflow in the financing activities in the Cash Flows Statement. |
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| 5.
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The declaration and issuance of a share dividend should be recorded in which activities of the Cash Flows Statement? |
| | A) | Operating activities |
| | B) | Investing activities |
| | C) | Financing activities |
| | D) | Non-cash investing and financing activities |
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| 6.
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Receipt of interest from borrowers should be recorded in which activities of the Cash Flows Statement? |
| | A) | Operating activities |
| | B) | Investing activities |
| | C) | Financing activities |
| | D) | Non-cash investing and financing activities |
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| 7.
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The cash purchase of the bonds of another corporation should be recorded in which activities of the Cash Flows Statement? |
| | A) | Operating activities |
| | B) | Investing activities |
| | C) | Financing activities |
| | D) | Non-cash investing and financing activities |
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| 8.
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Issuing bond in exchange of cash should be recorded in which activities of the Cash Flows Statement? |
| | A) | Operating activities |
| | B) | Investing activities |
| | C) | Financing activities |
| | D) | Non-cash investing and financing activities |
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