1. Consider the following: Net income = $10,000, depreciation expense = $2,000, accounts receivable increased by $800, inventory decreased by $100, and accounts payable increased by $500. Based on this information alone, what is cash flow from operating activities?

   1. $12,000

   2. $11,600

   3. $11,800

   4. $13,400

2. Which of the following would not appear in the investing section of the statement of cash flows?

   1. Purchase of inventory

   2. Sale of obsolete equipment used in the factory

   3. Purchase of land for a new office building

   4. All of the above would appear in the investing section

6. Which of the following statements is true?

   1. Preferred stock is usually more risky investment than common stock

   2. Convertible preferred stock is exchangeable for a set number of common stock shares at the option of the investor at some specified date after the shares have been issued

   3. Callable preferred stock can be exchanged for a designated cash value usually higher than its par value at the option of the investor

   4. All of the above is true

   5. Both b and c are true

7. Assume the following shares outstanding:

Preferred stock, 6%, $50 par value, cumulative, 1000 shares with dividends in arrears 3 years, for 2006, 2007 and 2008

Common stock, $100 par value, 2000 shares

Total dividends declared in 2009 were $50 000. The total amount of dividends to which common stockholders are entitled is

1. $62 000

2. $50 000

3. $45 000

4. $38 000

5. None of the above is correct