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:

Base Pairs

Pairs of nucleotides that form the building blocks of the DNA double helix, with adenine pairing with thymine, and cytosine pairing with guanine.

Insertion

The attachment site of a muscle tendon to the bone that moves when the muscle contracts.

Reverse Transcriptase

An enzyme that catalyzes the formation of DNA from an RNA template, used by retroviruses in their replication process.

Retroviruses

A group of RNA viruses that insert a DNA copy of their genome into the host cell to replicate, associated with certain cancers and HIV.