1)Cash transactions relating to the purchase and sale of which types of assets affect a company's cash flows from investing activities?

A) All of a company's non-current assets.

B) All of a company's assets.

C) All of a company's assets except inventory.

D) Only property, plant and equipment.

2)The reporting of financing activities is identical under the indirect and direct methods for the statement of cash flows.
A) True

B) False

3) A company issues 119,000 shares of preferred stock for $43 a share. The stock has a fixed annual dividend rate of 9% and a par value of $4 per share. Preferred stockholders can anticipate receiving a dividend of:
A) $42,840 each year.
B) $460,530 each year.
C) 9% of the market value of the stock at the time the dividend is declared.

D) 9% of net income each year.

4) Two years ago, your company bought $48,000 in bonds from another company. This month, it sold half of those bonds for $22,140 and lent $1,750 to an employee with a promissory note. On the statement of cash flows for this accounting period, your company would report a net cash:
A) inflow of $20,390 from investing activities.
B) inflow of $22,140 from investing activities.
C) outflow of $20,390 from investing activities.
D) outflow of $22,140 from investing activities.

5) Which of the following statements about dividends is not true?
A) Dividends represent a sharing of corporate profits with owners.
B) Both stock dividends and cash dividends reduce retained earnings.
C) Cash dividends paid to stockholders reduce net income.

D) Dividends are declared at the discretion of the board of directors.

6) A company reported net income of $6 million. During the year the average number of common shares outstanding was 3 million. The price of a share of common stock at the end of the year was $5. There were 400,000 shares of preferred stock outstanding on average and no dividends were declared and the preferred stock is noncumulative.

The EPS is approximately:
A) $1.86.
B) $0.40
C) $1.76.

D) $2.00.