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Please answer all parts (: 3A. Which of the following events would be reported on the statement of cash flows as a noncash investing and/or
Please answer all parts (:
3A. Which of the following events would be reported on the statement of cash flows as a noncash investing and/or financing activity?
- The conversion of convertible bonds into common stock.
- The granting of qualified stock options.
- A and B.
- Neither A nor B.
- The conversion of convertible preferred stock into common stock.
- The declaration of a 15% stock dividend.
- E and F.
- Neither E nor F.
- Issuing common stock to an attorney for services rendered in starting the corporation.
- Acquiring land by issuing common stock to the owner of the land.
- I and J.
- Neither I nor J.
3B. Free cash flow can be used for which of the following events?
- Purchasing treasury stock.
- Paying the salaries and wages of employees.
- A and B.
- Neither A nor B.
- Paying back debt before its scheduled maturity.
- Paying cash dividends.
- E and F.
- Neither E nor F.
- Acquiring other businesses.
- Purchasing available for sale debt investments.
- I and J.
- Neither I nor J.
3C. Which of the following statements is correct?
- According to the FASB, free cash flow is computed by subtracting capital expenditures from operating cash flows.
- The statement of cash flows is not immune to accounting trickery.
- A and B.
- Neither A nor B.
- If a corporation uses the direct method to report its cash flows from operating activities, it is also required to report a schedule which reconciles its net income to its operating cash flows.
- The cash flows related to the acquisition and subsequent sale or maturity of debt investments classified as trading securities must be reported as investing activities.
- E and F.
- Neither E nor F.
- Transactions between cash and cash equivalents are viewed as cash management activities that do not need to be disclosed on the statement of cash flows.
- If a corporation acquires the common stock of another company in December, 2021, with the intention of selling the investment in January, 2022, the acquisition of the investment should be reported as an investing activity on the corporations statement of cash flows for 2021.
- I and J.
- Neither I nor J.
3D. When using the indirect method of reporting operating cash flows, which of the following items would be added to net income?
- The increase in the deferred tax liability.
- Amortization of a discount on bonds payable.
- A and B.
- Neither A nor B.
- Loss from the impairment of goodwill.
- Gain from sale of equipment.
- E and F.
- Neither E nor F.
Which of the following items would be deducted from net income?
- I. The increase in marketable equity securities.
- J. The increase in accounts receivable (net).
- K. I and J.
- L. Neither I nor J.
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