Mat 540 Quiz

3 | Differentiate between investing activities, financing activities, and operating activities.Investing activities include lending money and collecting interest, financing includes borrowing money and paying interest and operating is the rest of it. | 6 | Identify the following items as (1) operating, (2) investing, or (3) financing activities: purchase of land; payment of dividends; cash sales; and purchase of treasury stock.Investing, financing, operating, financing. | 7 | Unlike the other major financial statements, the statement of cash flows is not prepared from the adjusted trial balance. From what sources does the information to prepare this statement come, and what information does each source provide?Balance sheet and income statement | | | 8 | Why is it necessary to
for the year ended December 31, 2010. State where each item is to be shown in the statement, if at all. | (a) | Plant assets that had cost $18,000 61/2 years before and were being depreciated on a straight-line basis over 10 years with no estimated scrap value were sold for $4,000.4000 | | (b) | During the year, 10,000 shares of common stock with a stated value of $20 a share were issued for $41 a share.410,000 | | (c) | Uncollectible accounts receivable in the amount of $22,000 were written off against the Allowance for Doubtful Accounts.No change | | (d) | The company sustained a net loss for the year of $50,000. Depreciation amounted to $22,000, and a gain of $9,000 was realized on the sale of available-for-sale securities for $38,000 cash. | | | 17 | Classify the following items as (1) operating, (2) investing, (3) financing, or (4) significant noncash investing and financing activities, using the direct method. | (a) | Cash payments to employees.Operating | | (b) | Redemption of bonds payable.Financing |