1) Match each qualitative characteristic with its definition.
2) Mobile Video Systems sold land, investments, and issued their own common stock
for $10 million, $15 million, and $20 million, respectively. Mobile Video also
purchased treasury stock, equipment, and a patent for $2 million, $4 million, and $6
million, respectively. What amount should the company report as net cash flows from
investing activities? What amount should the company report as net cash flows from
financing activities?
3) Investments in debt securities are classified for reporting purposes in one of three
categories. List these three categories and explain which investments are included in
each category. Also briefly describe how the reporting differs for each category.
4) For each of the following ten transactions, indicate by letter whether the cash effect
of each transaction is reported in a statement of cash flows as an operating (O),
investing (I), financing (F), or noncash (NC) activity. Also, indicate whether the
transaction is a cash inflow (CI), cash outflow (CO), or no effect on cash (NE). The first
answer is provided as an example.
5) On March 31, the board of directors of Shoeboxes, Inc. declares a 100% stock
dividend on its 100,000, $0.01 par, common shares. The market price of Shoeboxes
common stock is $30 on March 31 . Record the stock dividend.
6) The following selected transactions occur during the first year of operations.
Determine how each should be reported in the statement of cash flows. State whether it
is a cash inflow or a cash outflow and whether it is an operating, investing, or financing
activity.
1> Issued a million shares of common stock at $20 per share.
2> Purchased land and a building for $3 million.
3> Received $200,000 from a cash sale of merchandise to customers.
4> Paid a dividend of $1 per share to common stockholders.
5> Loaned $50,000 to an employee and accepted a note receivable.