In a Statement of Cash Flows, Which of the Following

question 8

Multiple Choice

In a statement of cash flows, which of the following events would not be classified as an operating activity?

• A)purchase of a trading security
• B)receipt of a cash dividend
• C)payment of interest on a bond issue
• D)proceeds from the sale, at a gain, of an available-for-sale security

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Definitions:

Onerous Contract

A contract where the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received from it.

Unavoidable Costs

Costs that cannot be eliminated, reduced, or postponed, and must be incurred regardless of specific business decisions or changes in operations.

Present Value Method

A technique used to determine the present value of future cash flows or income streams to evaluate investment projects or financial products.

Net Market Value

The amount that could be obtained from selling an asset in the market after deducting any selling costs or liabilities.