102 a company acquires its own stock to hold as treasury stock if the company prepar 4307921

102 a company acquires its own stock to hold as treasury stock if the company prepar 4307921

102) A company acquires its own stock to hold as treasury stock. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The acquisition of treasury stock would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.

B) The acquisition of treasury stock would be presented in the non-cash investing and financing activities section under both methods.

C) The acquisition of treasury stock would be presented in the financing activities section as a cash payment under both methods.

D) The acquisition of treasury stock would be presented in the investing activities section as a cash payment under both methods.

103) A company sells treasury stock for an amount less than its acquisition cost. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The sale of treasury stock would be presented in the investing activities section as a cash receipt under both methods.

B) The sale of treasury stock would be presented in the non-cash investing and financing activities section under both methods.

C) The sale of treasury stock would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash receipt under the direct method.

D) The sale of treasury stock would be presented in the financing activities section as a cash receipt under both methods.

104) A company purchases equipment for use in its business activities. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The purchase of equipment would be presented in the non-cash investing and financing activities section under both methods.

B) The purchase of equipment would be presented in the financing activities section as a cash payment under both methods.

C) The purchase of equipment would be presented in the investing activities section as a cash payment under both methods.

D) The purchase of equipment would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.

105) A company sells equipment at a loss. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The sale of equipment at a loss would be presented in the investing activities section as a cash payment under both methods.

B) The sale of equipment at a loss would be presented in the investing activities section as a cash receipt under both methods.

C) The sale of equipment at a loss would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash receipt under the direct method.

D) The sale of equipment at a loss would be presented in the financing activities section as a cash receipt under both methods.

106) A company purchases land using its common stock. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The purchase of land would be presented in the financing activities section as a cash payment under both methods.

B) The purchase of land would be presented in the investing activities section as a cash payment under both methods.

C) The purchase of land would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.

D) The purchase of land would be presented in the non-cash investing and financing activities section under both methods.

107) A company uses the indirect method to prepare the statement of cash flows. How would a gain from the sale of equipment be presented on the statement?

A) A gain from the sale of equipment would be an addition in the investing activities section.

B) A gain from the sale of equipment would be added to net income in the operating activities section.

C) A gain from the sale of equipment would be a deduction in the financing activities section.

D) A gain from the sale of equipment would be deducted from net income in the operating activities section.

108) A company uses the indirect method to prepare the statement of cash flows. How will a loss from the sale of a building be presented on the statement?

A) A loss from the sale of a building can be an addition in the investing activities section.

B) A loss from the sale of a building can be added to net income in the operating activities section.

C) A loss from the sale of a building can be deducted from net income in the operating activities section.

D) A loss from the sale of a building can be a deduction in the financing activities section.

109) A company uses the indirect method to prepare the statement of cash flows. In determining the net cash flow from operating activities, which of the following items would be added to net income?

A) An increase in dividends paid would be added to net income.

B) An increase in accrued liabilities would be added to net income.

C) A decrease in accounts payable would be added to net income.

D) A gain on the sale of land would be added to net income.

110) A company uses the indirect method to prepare the statement of cash flows. It sold a piece of equipment at a loss of $3,600. The equipment was purchased several years ago for $70,500 and had accumulated depreciation of $56,900. What is reported under the operating activities section on the statement of cash flows?

A) Cash proceeds of $10,000 are subtracted from net income.

B) Cash proceeds of $10,000 are added to net income.

C) The loss of $3,600 is subtracted from net income.

D) The loss of $3,600 is added to net income.

111) A company uses the indirect method to prepare the statement of cash flows. It sold a piece of equipment at a gain of $3,600. The equipment was purchased several years ago for $70,500 and had accumulated depreciation of $52,900. What is reported under the operating activities section on the statement of cash flows?

A) Cash proceeds of $21,200 are subtracted from net income.

B) Cash proceeds of $21,200 are added to net income.

C) The gain of $3,600 is added to net income.

D) The gain of $3,600 is subtracted from net income.

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