41. The statement of cash flows classifies cash used for interest expense as
A. an operating activity
B. an investing activity.
C. a financing activity.
D. an exchange activity.
E. a funds usage activity.
42. During Year 4, Adams Company had a net increase in accounts payable for purchases on account. Accounting classifies this source of cash in the _____ section of the statement of cash flows.
A. Investing
B. Operations
C. Financing
D. Exchange
E. Funds Flow
43. King Corporation borrowed $75,000 during Year 2 from its bank under a short-term borrowing arrangement. The statement of cash flows for King Corporation classifies the transaction as a(n)
A. operating activity
B. investing activity.
C. financing activity.
D. lending activity.
E. exchange activity.
44. Queen Corporation borrowed $750,000 during Year 3 from its bank under a long-term borrowing arrangement. The statement of cash flows classifies the transaction as a(n)
A. operating activity.
B. investing activity.
C. financing activity.
D. exchange transaction.
E. lending activity.
45. Jamison Corporation issued preferred stock totaling $10,000,000 during Year 4. The statement of cash flows classifies the transaction as a(n)
A. operating activity.
B. investing activity.
C. financing activity.
D. exchange transaction.
E. equity transaction.
46. Glass Corporation retired $7,500,000 of long-term debt at maturity. The income statement shows no gain or loss on retirement of debt. The statement of cash flows classifies the transaction as a(n)
A. operating activity
B. investing activity.
C. financing activity.
D. exchange transaction.
E. lending activity.
47. Towson Corporation acquired 1,000,000 shares of its own common stock for $10,000,000 during Year 2. The statement of cash flows classifies the transaction as a(n)
A. exchange transaction.
B. investing activity.
C. financing activity.
D. operating activity.
E. equity activity.
48. Exxon Corporation declared and paid $90,000 of dividends to its shareholders during Year 3. The statement of cash flows classifies the transaction as a(n)
A. investing activity.
B. financing activity.
C. operating activity
D. exchange transaction.
E. equity activity.
49. During Year 9, Hart Motors Corp. had a net $100,000 decrease in Warranties Payable. The T-account work sheet for preparing the statement of cash flows
A. adds this decrease in Warranties Payable so that cash flow from operations reports cash expenditures, not expenses.
B. subtracts this decrease in Warranties Payable so that cash flow from operations reports cash expenditures, not expenses.
C. adds this decrease in Warranties Payable so that cash flow from operations reports cash expenses, not expenditures.
D. subtracts this decrease in Warranties Payable so that cash flow from operations reports cash expenses, not expenditures.
E. subtracts this decrease in Warranties Payable so that cash flow from financing reports cash expenses, not expenditures.
50. In determining cash flows from operations under the indirect method, the adjustments to convert net income to cash flow from operations generally involve _____ the amount by which an expense exceeds the related cash expenditure for the period (for depreciation, the entire amount).
A. subtracting
B. multiplying
C. adding
D. dividing
E. cannot be determined from the information provided
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