1. The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement. A) True B) False 2. The payment of interest on bonds payable is classified as a cash outflow from operating activities. A) True B) False 3. Financing activities involve A) issuing debt. B) lending money. C) acquiring investments. D) acquiring long-lived assets. 4. The acquisition of land by issuing common stock is A) only reported if the statement of cash flows is prepared using the direct method. B) a cash transaction and would be reported in the body of a statement of cash flows. C) a noncash transaction which is not reported in the body of a statement of cash flows. D) a noncash transaction and would be reported in the body of a statement of cash flows. 5. Budgeting is usually most closely associated with which management function? A) Motivating B) Directing C) Controlling D) Planning