1. The section of the statement of cash flows that accounts for dividends paid by the company is the:

1. Recorded as note to statement of cash flows.
2. Financing section
3. Operating section
4. Investing section

2. Using the direct method to create the statement of cash flows means that:

1. Cash received and collected from customers will be displayed in the operating section
2. The statement of cash flows will start with net income in the investing section
3. The financing section will be calculated differently than would be the case under the indirect method.

3. On January 1, 2019, the accounts receivable account had a $2,505 debit balance. At December 31, 2019, accounts receivable had grown to $3,120. A company using the indirect approach would

1. add $3,120 to net income in the operating section.
2. add $615 to net income in the operating section
3. add $2,505 to net income in the operating section
4. deduct $615 from net income in the operating section

4. The purchase of new equipment for cash in a company is an example of

Select one:

1. an investing activity deduction
2. an investing activity addition
3. a financing activity addition
4. a financing activity deduction

5. The direct method of producing a statement of cash flows differs from the indirect method in that the direct method

1. begins directly with net income in the financing section
2. does not depend on starting the operating section with net income.
3. begins directly with net income in the investing section
4. begins directly with net income in the operating section

6. In using the indirect method, the operating section will show depreciation expense for the period as an amount that must be

1. added to net income.
2. deducted from net income
3. ignored
4. none of these answers are correct.

7. An older building is sold by a company for a price that created a gain upon getting rid of this asset. The proper recognition of this event in the statement of cash flows for a company using the indirect method is

1. record in the operating and investing sections
2. record in the investment section only
3. record in the financing section only
4. record in the operating section only

8. If, during the year, a company using the indirect method has experienced both gains and losses on the sale of older assets, the proper treatment of these gains and losses in the operating section is to

1. none of these treatments are correct
2. subtract the losses from the gains and add the difference to net income.
3. add in the gains and subtract the losses
4. add in the losses and subtract the gains

9. During 2019, Xylo Company sells common stock for $260,000; retires a bond at a cost of $241,000; and pays dividends to shareholders of $29,550. The impact of these activities on the statement of cash flows is

1. $260,000 increase in the investing section
2. $10,550 increase in the financing section
3. $10,550 decrease in the financing section
4. $19,000 increase in the investing activities section

10. Common stock issued in exchange for land would be reported in the statement of cash flows in

1. the cash flows from financing activities section
2. the cash flows from investing activities section
3. a separate schedule
4. the cash flows from operating activities section

11. Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

1. retiring of bond payable
2. acquiring of treasury stock
3. declaring stock dividends
4. issuing long-term debt

12. A five-year bond was issued at par for $640,000 cash. This transaction should be shown on a statement of cash flows under

1. investing activities
2. operating activities
3. financing activities
4. noncash activities

13. Which of the following is a noncash investing and financing activity?

1. buying of merchandise inventory on account
2. payment of a cash dividend
3. issuing common stock in exchange for land
4. payment of a 10-month notes payable

14. Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

1. an increase in accounts payable
2. a decrease in accounts payable
3. preferred dividends declared and paid
4. an increase in inventory

15. During 2019, the board of directors declared cash dividends of $625,000. The comparative balance sheets indicate that dividends payable were $24,000 on January 1, 2019 and were at $17,500 on December 31, 2019. What amount of cash was paid to stockholders during 2019? (Hint: A T-account would probably help you to visualize this)

1. $642,500
2. $631,500
3. $649,000
4. $625,000