Q1. Investing activities include cash transactions that primarily affect the purchasing and selling of (current assets /

Question:

Q1. Investing activities include cash transactions that primarily affect the purchasing and selling of (current assets / ______________ / current liabilities / long-term liabilities / stockholders’ equity). (Circle all that apply)
Q2. Identify the transactions that are recorded in the investing section of the statement of cash flows.
(___________ / Not) a. Sell equipment.
(Investing / ___________) b. Pay rent for the next accounting period. (Operating)
(___________ / Not) c. Purchase office building.
(Investing / ___________) d. Issue additional shares of your company’s common stock. (Financing)
(___________ / Not) e. Purchase 1,000 shares of in Best Buy Company, Inc.
(Investing / ________) f. Receive $560 in dividends from Best Buy Company, Inc. (Operating)
(___________ / Not) g. Sell the 1,000 shares of Best Buy Company, Inc. at a loss.
Q3. A net cash inflow results from (purchasing / ___________) more property, plant, and equipment. If a company is selling income-producing assets, resulting future revenues will most likely be (higher / ___________), which is considered (favorable / ___________). However, if the asset being sold is an unprofitable division, then it would be considered (___________/ unfavorable).
Q4. A net cash inflow results from (purchasing / ___________) investment securities. If the reason for selling the investments is to take profits, this is considered (___________/ unfavorable). If the reason for selling the investments is to finance operations, this is considered (favorable / ___________). If a gain is realized on the sale of assets (more / less / ___________) cash will be received if a loss is reported.
Q5. Refer to the accounting information immediately above to answer the following questions.
a. From the sale/purchase of PPE, LUV has a net cash (inflow / ___________), which indicates the company is (___________/ selling) more PPE. This most likely indicates the business is (___________/ down-sizing). What PPE items is LUV most likely purchasing/selling?
b. For investing activities, LUV reports a (_______ / weak) cash position. Why?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...