Question
1. Which of the following statements is correct? A - purchase of land for cash is classified as a financing activity on the statement of
1. Which of the following statements is correct?
A - purchase of land for cash is classified as a financing activity on the statement of cash flows B - Issuance of common stock issued for cash is classified as an investing activity on the statement of cash flows C - purchase of land for cash is classified as a operating activity on the statement of cash flows D - Issuance of common stock issued for cash is classified as a financing activity on the statement of cash flows
2. Which of the following is classified as operating activities? Choose the best answer.
1) Interest received from bond investment 2) Dividends paid to stockholders 3) Interest paid to lenders 4) Dividends received
A - None of them B - 1 and 4 C - 1, 2, 3, and 4 D - 1, 3, and 4
3. Which of the following statements is not correct? A - The acquisition of land by issuing common stock is a noncash transaction which is not reported in the body of a statement of cash flows B - The indirect and direct methods of preparing the statement of cash flows are identical except for the financing activities section C - When equipment is sold for cash, the amount received is reflected as a cash inflow in the investing section D - Purchase of a long-term investment in bonds would not be classified as a financing activity
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