Multiple choice

1. On the Statement of Cash Flows, payments to purchase bonds and stocks of other companies are reported in the 

operating activities section.

investing activities section.

financing activities section.

schedule of noncash investing and financing activities

2. On the Statement of Cash Flows, payments to lenders for interest are reported in the

 operating activities section.

investing activities section.

financing activities section.

schedule of noncash investing and financing activities

3. When doing a horizontal analysis of Net Income for 2003, 2004, 2005, 2006, and 2007, the 2006 Net Income dollar amount is divided by the 

2007 Net Income dollar amount.

2006 Net Income dollar amount.

2003 Net Income dollar amount.

an average dollar amount calculated using all five years

4. A decrease in stockholders' equity as a result of operating a business isinvestment.

revenue.

expense.

dividends.

Investors are