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226 Chapter An example of a cash flow from a financing activity is: a. receipt of cash from sale of land b. receipt of cash from collection of accounts receivable c. payment of cash for acquisition of treasury stock d. payment of cash for new machinery 6. 7. Which of the following items appears first on the statement of cash flows prepared using the direct method? a. retained earnings b. cash received from customers c. net income d. depreciation 8. Which of the following would not be considered a noncash investing and financing activity in preparing a statement of cash flows? a. withdrawal of cash by the owner of a business b. issuance of common stock to retire long-term debt c. acquisition of a manufacturing plant by issuing bonds d. issuance of common stock in exchange for convertible preferred stock 9. To convert the cost of merchandise sold as reported on the income statement to cash payments for merchandise, the cost of merchandise sold is increased for the: a. increase in inventories b. increase in accounts payable c. decrease in inventories d. decrease in accounts receivable 10. Cash payments for income taxes are included on the statement of cash flows as: a. financing activities b. investing activities c. operating activities d. nonoperating activities 11. A loss on the sale of land is reflected on the statement of cash flows by a. adding the loss to the book value of the land to determine the cash flow from investing activities operating activities. cash flow from investing activities. b. deducting the loss from net income to determine the cash flow from c. deducting the loss from the book value of the land to determine the d. both b and c

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