6 Which of the following items is reported on the statement

6. Which of the following items is reported on the statement of cash flows under financing A. Declaration of a cash dividend. B. Payment of a cash dividend. C. Declaration of a stock dividend. D. Payment of a stock dividend E. Stock split. 7. The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is: A. Operating activities. B. Financing activities. C. Investing activities. D. Schedule of noncash investing or financing activity E. None of these. This is not reported on the statement of cash flows. 8. Which of the following is included in the cash flows from financing activities section of the statement of cash flows? A. Interest revenue. B. Sale of equipment. C. Interest expense D. Purchase of treasury stock E. Purchase of stock in another company. 9. The accounting principle that requires important noncash financing and investing activities be reported on the statement of cash flows or in a footnote is the: A. Historical cost principle. B. Materiality principle. C. Full disclosure principle. D. Going concern principle E. Business entity principle. 10. The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is: B. Financing activities. C. Investing activities. le of noncash investing or financing activity E. Reconciliation of cash balance.

Solution

6.

Correct answer is B. Payment of cash dividend

Payment of stock dividend, declaration of cash dividend or stock split doesnot involve outflow of cash. Hence, they do not form part of cash flow statement.

7.

Correct answer is B. Financing activities

Common stock shares are issued for financing the operations of the company. Hence, they are disclosed in the financing section of the cash flow statement.

8.

Coorrect answer is C. Interest expense

Interest expense is paid for loans which are used for financing the operations of the company..