6) The board of directors is considering approving a declaration and payment of dividends for the second quarter of the year. How will this decision affect the period’s cash flows from operations—indirect method?

A) It will increase this period’s cash flows from operations.

B) It will decrease this period’s cash flows from operations.

C) It will not affect this period’s cash flows from operations.

D) This does not affect cash flows from operations.

7) The section of the statement of cash flows from investing activities includes:

A) buying debts or stocks of other companies.

B) collecting loans and/or interest.

C) cash purchases of equipment.

D) All of the above.

 

8) The sale of plant and equipment for cash would result in:

A) an increase in cash from investing activities.

B) a decrease in cash from investing activities.

C) an increase added to net income from operations.

D) a decrease subtracted from net income from operations.

9) Transactions dealing with the exchange of cash between the firm and its owners (stockholders) and creditors are called:

A) planning activities.

B) financing activities.

C) investing activities.

D) operating activities.

 

10) Which of the following is a cash outflow from a financing activity?

A) A purchase inventory

B) A purchase of treasury stock

C) A payment to buy property

D) A loan made to a third party

 

11) A sale of fixed assets for cash is a(n):

A) managing activity.

B) investing activity.

C) financing activity.

D) operating activity.

 

12) Cash flows from financing activities would include:

A) issuance of long-term notes.

B) cash purchase of stocks and bonds.

C) cash from sale of stock investments.

D) All of these answers are correct.

13) Payments of cash dividends to stockholders would result in:

A) a decrease of cash flow from operating activities.

B) a decrease of cash flow from investing activities.

C) an increase of cash flow from financing activities.

D) a decrease of cash flow from financing activities.

 

14) Issuance of common stock for cash would result in:

A) an increase of cash flow from operating activities.

B) a decrease of cash flow from investing activities.

C) an increase of cash flow from financing activities.

D) an increase of cash flow from investing activities.

 

15) Loaning cash to borrowers would result in:

A) an increase of cash flow from investing activities.

B) a decrease of cash flow from investing activities.

C) an increase of cash flow from financing activities.

D) a decrease of cash flow from financing activities.

 

 

 



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