Select the correct option:

1. The indirect method for the preparation of the operating activities section of the statement of cash flows:

a. Is required if the company is a merchandiser.

b. Must not be used in all circumstances

c. Separately lists each major item of operating cash receipts.

d. Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.

e. Separately lists each major item of operating cash payments.

2. The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:

a. Reconciliation of cash balance.

b. Investing activities.

c. Operating activities.

d. Schedule of noncash investing or financing activity.

e. Financing activities.

3. The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:

a. Schedule of noncash investing or financing activity.

b. Operating activities.

c. None of these. This is not reported on the statement of cash flows.

d. Financing activities.

e. Investing activities.

4. The statement of cash flows helps address questions such as

a. How is the increase in investments financed?

b. Why is cash flow from operations different from income?

c. The statement of cash flows helps to address all of the questions listed.

d. What is the source of cash for new plant assets?

e. How much cash is generated from or used in operations?