The Responsible Company Completed the Following Transactions Involving Investments During

question 89

Multiple Choice

The Responsible Company completed the following transactions involving investments during 2012. Responsible uses the indirect method to prepare the operating activities section of the statement of cash flows. The following statements describe how Responsible reported the cash flow effects of the transactions above on its 2012 statement of cash flows. Which of the following has been reported incorrectly by Responsible?

• A) Payments of $80,000 for 20-year treasury bonds were reported as a cash outflow in the operating activities section.
• B) Proceeds of $100,000 were reported as a cash inflow in the investing activities section.
• C) Payments of $55,000 for trading securities were reported as a cash outflow in the investing activities section.
• D) A gain of $20,000 on the sale of available-for-sale securities was deducted from net income in the operating activities section.

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Definitions:

High-Fat Diet

A diet that contains a high proportion of fats, often associated with increased health risks.

Colorectal Cancer

A type of cancer that begins in the colon or rectum, parts of the digestive system, and can involve either benign polyps that may develop into cancer or malignant tumors.

Refrigeration

The process of cooling or freezing a space or substances to preserve perishable items, such as food or medicine.

Food Additives

Substances added to food to preserve flavor or enhance its taste, appearance, or other qualities.