Question

Multiple Choice Question 85

Which of the following is classified as a financing activity?

Payment of dividends

Receipt of dividend income

Receipt of interest on loan receivable

Investment in another company’s stock

Multiple Choice Question 87

When a company repurchases its own stock, which of the following is the correct reporting on the statement of cash flows?

A source of cash in the investing section

A use of cash in the investing section

A source of cash in the financing section

A use of cash in the financing section

Multiple Choice Question 89

During the current year, XYZ Corporation purchased land for $5,000 and sold a piece of factory machinery with a book value of $15,000 for $12,000 cash. What is XYZ’s net cash flows provided by investing activities for the year?

($10,000)

$7,000

$10,000

($7,000)

Multiple Choice Question 93

For the past two years, Monroe Corporation’s statement of cash flows has shown net cash provided by investing activities. Which of the following choices could explain this result?

Collection of accounts receivable balances.

Sales of factory equipment.

Receipt of cash dividends from investments in other company’s stock.

Issuance of long-term debt.

Answer 1

85)Correct option is "A"- Payment of dividends

Payment of dividend is a return on equity invested by stockholders .Amount invested by stockholders is a long term source of funds classified as part of financing activities

87)correct option is "D"- A use of cash in the financing section

Issue of shares is a part of financing activity thus repurchase of shares is also a part of financing activity. When a company repurchase its own shares it results in cash outflow thus it is a use of cash .

89)correct option is "B"-7000

sale of machinery	12000
purchase of land	-5000
Net cash flow from investing activities	7000

93)correct option is "C"- Receipt of cash dividends from investments in other company’s stock

For the past two years .Company has shown net cash provided by investing activities which means company has made a investment in other company's stock and is receiving regular dividend income.