Scotty Company Reported the Following Information at the End of 2011

question 17

Multiple Choice

Scotty Company reported the following information at the end of 2011 and 2012: An analysis of Scotty's records indicated that there were no cash flow effects resulting from the changes in the two accounts presented above. How should Scotty report the changes in these accounts on a statement of cash flows?

• A) Scotty should report $200,000 for the acquisition of land as an investing activity and $200,000 for the issuance of stock as a financing activity.
• B) Scotty should report $200,000 as a noncash investing and financing activity for the acquisition of land by issuing common stock.
• C) Scotty should report the issuance of common stock to acquire land in the financing activity section with a net cash flow effect of zero.
• D) Scotty should report the acquisition of land by issuing common stock in the investing activity section with a net cash flow effect of zero.

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Definitions:

Dampening Scenario

A situation where fluctuations in demand or supply are reduced or stabilized to minimize the impact on operations or planning.

Bullwhip Measure

A metric that quantifies the increase in variability or fluctuations in order and inventory levels observed as one moves up the supply chain from retailers towards manufacturers.

Supply Chain

The network of manufacturers, suppliers, and logistics providers involved in producing and delivering a product to the end user.

Variance

A statistical measure of the dispersion showing how much the values in a data set diverge from the mean or expected value.