Ch. 12 and 13 Multiple choice

D. increase trading of the other companies' stock

Corporations invest in other companies for all of the following reasons except to

C. issuing debt

Financing activities involve

B. the statement of cash flows

In addition to the three basic financial statements, which of the following is also a required financial statement?

A. Collecting cash on loans made

Investing activities include

D. in a separate schedule at the bottom of the statement of cash flows

Land acquired from the issuance of common stock is reported

C. investment portfolio

When a company holds stock of several different corporations, the group of securities is identified as a

D. long-term liability and stockholder's equity items

Financing activities involve

A. Operating activities

Generally, the most important category on the statement of cash flows is cash flows from

A. the equity method is usually applicable

If a company acquires a 40% common stock interest in another company,

A. Two cash effects can be netted and presented as one item in the investing activities section

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the

C. it is presumed that the investor has relatively little influence on the investee

If an investor owns less than 20% of the common stock of another corporation as a long-term investment,

C. net income of the investee is not considered earned by the investor until dividend are declared by the investee

If the cost method is used to account for long-term investment in common stock,

C. are credited to the stock investment account

If the equity method is being used, cash dividends received...

D. Equity

In accounting for stock investments between 20% and 50%, the ------ method is used

A. Generate earnings

Pension funds and mutual funds regularly invest in debt and stock securities to

C. a long-term investment account

The account, stock investments is

D. investor's influence on the investee is insignificant

The cost method of accounting for long-term investments in stock should be employed when the

A. Operating, investing, and financing

The order presentation of activities on the statement of cash flows is

C. provide information about the cash receipts and cash payments during a period

The primary purpose of the statement of cash flows is to

B. Summarizes the operating, financing, and investing activities of an entity

The statement of cash flows

A. the adjusted trial balance

The statement of cash flows is prepared from all of the following except

C. the stock investments account is decreased

Under the equity method of accounting for long-term investments in common stock, when a dividend is received from the investee company

D. has significant influence on the investee and that the equity method should be used to account for the investment

When an investor owns between 20% and 50%, of the common stock of a corporation, it is generally presumed that the investor

B. between 20%-50% significant influence

Which of the following is the correct matching concerning an investors influence on the operations and financial affairs of an investee?