Question 1. Newby Corporation's 2000 net income is smaller than net cash flow from operating activities. Which of the following would not be an explanation of why net income is smaller than net cash flow from operating activities?
a. Newby paid dividends to shareholders during 2000.
b. Newby's accounts payable increased during 2000.
c. Newby recognized depreciation expense in 2000.
d. Newby sold machinery at a loss in 2000.
Question 2. Rent expense in Lailani Company's 2001 income statement is $360,000. If Prepaid Rent was $45,000 at December 31, 2000, and is $70,000 at December 31, 2001, the cash paid for rent during 2001 is:
a. $360,000
b. $385,000
c. $335,000
d. $430,000
Use the following to answer questions below:
An analysis of Clifton Corporation's Investment in Marketable Securities account during 2000 disclosed the following:
Debit entries $375,000
Credit entries 200,000
Clifton's 2000 income statement included a $20,000 loss on sale of marketable securities and $15,000 dividend income from marketable securities. All payments and proceeds relating to marketable securities transactions were in cash.
Question 3. Refer to the above data. The amount of cash paid by Clifton Corporation in 2000 for the purchase of marketable securities was:
a. $395,000
b. $375,000
c. $355,000
d. $360,000
Question 4. Refer to the above data. The cash proceeds received by Clifton Corporation in 2000 for the sale of marketable securities was:
a. $220,000
b. $200,000
c. $195,000
d. $180,000
Question 5. Refer to the above data. How should the transactions involving marketable securities be classified in Clifton's statement of cash flows for 2000?
a. The purchase of marketable securities, sales of marketable securities, and receipt of dividends are all classified as investing activities.
b. The purchase and the sale of marketable securities are classified as investing activities; the receipt of dividends is classified as an operating activity.
c. The purchase of marketable securities is classified as an investing activity; the sale of marketable securities is classified as a financing activity; the receipt of dividends is classified as an operating activity.
d. The purchase and the sale of marketable securities are classified as investing activities; the receipt of dividends is classified as a financing activity.