1. Which of the following is not a financing activity?

a. Making a cash payment to repay a bank loan.

b. Purchasing a company's own stock (treasury stock) for cash.

c. Selling an investment in IBM stock for cash.

d. Issuing bonds for cash.

2. Which of the following is not an investing activity?

a. Purchase of investments for cash.

b. Sale of land for cash.

c. Purchase of equipment for cash.

d. Sale of merchandise for cash.

3. Cash flows from borrowing and paying off a 90-day bank loan are classified as:

a. Investing activities.

b. Financing activities.

c. Operating activities.

d. Purchasing activities.

4. Cash flows from acquiring and disposing of long-term assets are classified as:

a. Financing activities.

b. Purchasing activities.

c. Operating activities.

d. Investing activities.

5. Which of the following is not a current reporting requirement for a statement that reports changes in cash over a period of time?

a. This statement must classify cash flows into three categories: operating, investing, and financing activities.

b. Working capital may be used as a substitute for cash in preparing this statement.

c. Cash equivalents must be combined with cash in preparing this statement.

d. The title for this statement is "Statement of Cash Flows."

6. A company reported net income for the current year. Which of the following business transactions would cause its cash from operating activities to be higher than its net income?

a. Cash dividends were paid to stockholders during the year.

b. Equipment was purchased for cash during the year.

c. A bank loan was repaid during the year.

d. Depreciation expense was recorded for the year.

7. When using the direct method to determine operating cash flows, how are salaries paid to employees reported on the Statement of Cash Flows?

a. Financing activity

b. Investing activity

c. Not reported on the statement of cash flows

d. Noncash investing and financing activity

e. Operating activity

8. When using the direct method to determine operating cash flows, how is the issuance of stock for cash shown on the Statement of Cash Flows?

a. Operating activity

b. Investing activity

c. Financing activity

d. Noncash investing and financing activity

e. Not reported on the statement of cash flows