The Appropriate Section in the Statement of Cash Flows for Reporting

question 111

Multiple Choice

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

• A)Operating activities.
• B)Financing activities.
• C)Investing activities.
• D)Schedule of noncash investing or financing activity.
• E)This is not reported on the statement of cash flows.

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Definitions:

Economies Of Scale

The cost advantage that arises with increased output of a product, where the cost per unit decreases as production expands.

Financial Resources

Funds available to a business or individual for spending in the form of cash, liquid securities, and credit lines.

High Capital Costs

Expenses incurred in acquiring or upgrading physical assets such as buildings and machinery, which can be a barrier to entry for new companies.

Maximizing Profits

A strategy or goal of increasing the difference between the total revenue and the total cost as much as possible.