Question

21) Which of the following would be added to net income when determining cash flows 21) from operating activities under the indirect method? A) A decrease in accounts receivable C) A gain on the sale of land dsb B) A decrease in accounts payable. D) An increase in prepaid expenses. 22) Which of the following would NOT be a component of cash flows from investing 22) activities? A) Purchase of equipment B) Purchase of investment securities. C) Sale of land D) Dividends paid to common shareholders. 23) Selected information from Peridot Corporation's accounting records and financial statements for 2018 is as follows (S in millions) 23) $ 36 Cash paid to acquire machinery Repurchase of Peridot common stock Cash proceeds from sale of land Gain on sale of land Investment income received Cash paid to acquire office equipment 50 90 50 66 80 In its statement of cash flows, Peridot should report net cash from investing activities of (amounts presented below as "absolute value") A) S10 million B) $76 million C) $26 million. D) $78 million. 24) In preparing its cash flow statement for the year ended December 31, 2018, Green Co. gathered the following data 24) Gain on sale of land Proceeds from sale of land Purchase of marketable securities Interest payments on long-term debt Cash dividends declared Cash dividends paid Proceeds from sales of Green Co. common stock $ 12,000 20,000 360,000 4,000 90,000 76,000 150,000 In its December 31, 2018, statement of cash flows, what amount should Green report as net cash from financing activities (amounts presented below as "absolute value")? A) $60,000 B) $54,000. C) $74,000. D) $40,000. B-S

Answer 1

21.

A decrease in accounts receivable would be added to net income when determining cash flows from operating activities under indirect method.

Correct option is (A)

22.

Dividend paid to common shareholders would not be a component of cash flows from investing activities

Correct option is (D)

23.

Cash paid to acquire machinery	- 36
Cash proceeds from sale of land	90
Cash paid to acquire office equipment	- 80
Net cash used in investing activities	$26

Correct option is (C) i.e. $26 MILLION

24.

Cash dividend paid	- 76,000
Proceeds from sale of common stock	150,000
Net cash provided by financing activities	$74,000

Correct option is (C)

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