1) If a business issued bonds payable in exchange for land, the transaction would be reported in a separate schedule on the statement of cash flows.
a. true
b. false
2) Rarely would the cash flows from operating activities, as reported on the statement of cash flows, be the same as the net income reported on the income statement.
a. true
b. false
3) Using the indirect method, if land costing $85,000 was sold for $145,000, the amount reported in the financing activities section of the statement of cash flows would be $85,000.
a. true
b. false
4) Ruben Company purchased $100,000 of Evans Company bonds at 100. Ruben later sold the bonds at $104,500 plus $500 in accrued interest. The journal entry to record the sale of the bonds would be:
a. Debit: Cash $105,000; Credit: Investment in Bonds $100,000; Gain on Sale of Investments $4,500 and Interest Revenue $500
b. Debit: Cash $105,000; Credit: Investment in Bonds $100,000 and Gain on Sale of Investments $5,000
c. Debit: Cash $105,000; Credit: Investment in Bonds $104,500 and Interest Revenue $500
d. Debit: Cash $104,500 and Interest Receivable $500; Credit: Investment in Bonds $100,000, Gain on Sale of Investments $4,500 and Interest Revenue $500
5) If land costing $145,000 was sold for $205,000, the $60,000 gain on the sale would be added to net income in of the operating activities section of the statement of cash flows (prepared by the indirect method).
a. true
b. false