1. Investing activities involve... A. Long-term investments. B. Short-term investments. C. Long-term assets. D. All of these choices.

2. Cash equivalents do not include... A. marketable securities. B. U.S. Treasury bills. C. commercial paper. D. money market accounts.

3. How are cash equivalents treated on a statement of cash flows? A. They are disclosed in the investing activities section. B. They are combined with the Cash account. C. They are disclosed in the financing activities section. D. They are disclosed in the operating activities section.

4. Which of the following statements is correct regarding the statement of cash flows? A. All of these choices. B. Analysts prefer the direct method to the indirect method. C. Companies prefer the direct method because it is easier and less expensive to prepare. D. A survey of large companies showed 98% of them use the indirect method.

5. The indirect method of preparing a statement of cash flows.... A. provides a different result than the direct method. B. shows collections from customers rather than the change in Accounts Receivable. C. eliminates the need for a schedule of noncash investing and financing transactions. D. adjusts net income for changes in current accounts.

6. Which of the following is reported as a noncash investing and financing transaction on the statement of cash flows? A. Purchase of treasury stock. B. Purchase of a building by taking out a long-term mortgage. C. Payment of long-term debt. D. Sale of preferred stock.

7. Investors and creditors would find the statement of cash flows least useful in assessing... A. ability to pay dividends and liabilities. B. need for additional financing. C. ability to generate positive future cash flows. D. financial position at a point in time.

8. Analysis of the financing activities section of the statement of cash flows will disclose... A. the amount of money loaned to others. B. net income for the period. C. purchases and sales of treasury stock. D. the extent of investments in plant and equipment.

9. The calculation of free cash flow could include all of the following except... A. net cash flows from operating activities. B. net income. C. dividends paid. D. cash purchases of plant assets.

10. The primary purpose of the statement of cash flows is to provide information.... A. about a company's investing and financing activities during an accounting period. B. regarding a company's financial position at the end of an accounting period. C. about a company's cash receipts and cash payments during an accounting period. D. regarding the results of operations for a period of time.