Z02

1) In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows

from

A. Lending activities C. Financing activities

B. Operating activities D. Investing activities

2) In a statement of cash flows, payments to acquire debt instruments of other entities (other than cash

equivalents) which will be held until maturity should be classified as cash outflows for

A. Lending activities C. Operating activities

B. Investing activities D. Financing activities

3) A loss on the sale of machinery in the ordinary course of business should be presented in a statement of

cash flows (using indirect approach for operating activities) as a(n)

A. Outflow of cash C. Deduction from net income

B. Addition to net income D. Inflow and outflow of cash

4) Which is not added to net income under the indirect method of preparing the statement of cash flows?

A. Increase in an accrued liability C. Loss on sale of patent

B. Amortization of discount on bond payable D. Increase in deferred tax asset

5) In a statement of cash flows in which the operating activities section is prepared under the indirect method,

a gain on the sale of an investment in available-for-sale securities should be presented as a(n)

A. Inflow and outflow of cash C. Addition to net income

B. Outflow of cash D. Deduction from net income