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18. Harbin corporation acquired land by issuing shares of its own common stock. In Harbin’s statement of cash flows, this transaction
a. should be shown on a schedule of noncash investing and financing transaction.
b. should be shown on the investing activities section as an outflow for purchase of a long term asset.
c. should be shown on the financing activities section as an inflow from stork.
d. will not be shown because cash was not involved.

19.Management may use the statement of cash flows to
a. assess the liquidity of the business
b. determine dividend policy
c. evaluate the effects of major policy decisions involving investments and financing.
d. do all of the above.

20. Cash equivalents are
a. all current assets that can be converted to cash.
b. short term, highly liquid investments that have a maturity of ninety days or less.
c. short term marketable securities that can be readily converted to cash.
d. near cash items that can be converted to cash within one year or one operating cycle, wh is less

12. The best way to study the composition of financial statements is to prepare
a. common size statements
b. a trend analysis
c. a horizontal analysis
d. a ration analysis

13.ratios are most useful in identifying
a. relationships
b. causes
c. problems
d. differences

15. Free cash flow is used to measure the
A degree of protection creditors have
b. cash generated after providing for commitments
c. overall earning power
D current return to an investor in a stock

For questions 7 to 17, identify each of the following as (a) an operating activity (b) an investing activity, (c) a financing activity, or (d) none of these. Use the blanks provided in the right

7. purchased lon term investment for cash ________
8. sold building at a loss __________
9. recorded amortization of a copyright _______
10. Purchased land for cash _____
11. Purchased treasury stock for cash ______
12. Received dividends on securities held _____
13. Purchased new plant by issuing a mortgage. ______
14. Sold preferred stock for cash ________
15. Transferred cash to a money market account ____
16. Declared and paid a cash dividend ______
17. Paid a current liability. _____

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