2) Smith Corporation makes $2,000 payments every month for leasing office equipment. Smith recorded a lease payment as follows:

Lease payable Interest expense	1,200 800
Cash		2,000

Amortization expense	1,200
Right-of-use asset		1,200

Smith must have a(n):

		a)Sales-type lease without selling profit.
		b) Operating lease.
		c)Finance lease.
	d)	Leveraged lease.

3) Distinguishing between operating and capital leases is due in large part to the accounting concept of:

	a)	Materiality.
	b)	Substance over form.
	c)	Conservatism.
	d)	Historical cost.

4)During the year, cash increased by $300 million. Investing and financing activities created positive cash flow totaling $500 million. What were net cash flows from operating activities in the statement of cash flows?

a)		Inflow of $300 million.
	b)	Outflow of $200 million.
c)		Outflow of $300 million.
d)		Inflow of $600 million.