Problem 3: Multiple Choice Questions (10 pts). 3.1 Which of the following statements is true? A) Stock dividends should be reported on the cash flow statement as financing activities. B) A company is said to have a complex capital structure if it has convertible preferred stock. C) A company with a simple capital structure has to report both basic and diluted EPS. D) The purchase and sale of cash equivalents are reported as investing activities in the cash flow statement. 3.2 Which of the following is a cash outflow from investing activities? A) Buy equipment. B) Buy inventories. C) Sell available-for-sale marketable securities. D) Sell treasury stock. 3.3 Which of the following statements is FALSE? A) An antidilutive security is one whose terms permit it to be converted into common stock, but if it were converted, EPS would increase rather than decrease. B) An antidilutive security is ignored in the EPS computations. C) Noncash transactions sometimes are reported in conjunction with the statement of cash flows. D) Stock dividends should be reported on the cash flow statement as investing activities. 3.4 Which of the following activities is reported as a cash inflow from financing activities? A) Pay cash dividends. B) Receive cash dividends. C) Stock-splits. D) Sell treasury stock. 3.5 When stock options expire without being exercised, which of the following accounts will decrease? A) Compensation expense. B) Retained earnings. C) Paid-in capital-stock options D) Common stock