5) If a company borrows money from a bank, the interest paid on this load should be reported on the statement of cash flows:

A. Operating activity

B. Investing activity

C. Financing activity

D. Noncash investing and financing activity

E. This is not reported in the statement of cash flows.

6) The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:

A. Operating activities

B. Financing activities

C. Investing activities

D. Schedule of noncash investing or financing activity

E. Reconciliation of cash balance

7) All of the following statements related to reporting cash flows from investing and financing activities are true except:

A. Reporting of financing activities is the same under the direct method and indirect method

B. Changes in noncurrent liability accounts are analyzed to determine cash flows from financing activities.

C. Changes in noncurrent asset accounts, current notes receivable, and current investments are analyzed to determine cash flows from investing activities.

D. The direct method applies accrual accounting while the indirect method applies cash basis accounting

E. Reporting of investing activities is the same under the direct method and indirect method.