A Transaction That Would Appear as an Application of Funds

question 23

Multiple Choice

A transaction that would appear as an application of funds on a conventional funds statement using the all-financial-resources concept, but not on a statement using the traditional working capital concept would be the

• A) Acquisition of property, plant, and equipment for cash
• B) Reacquisition of bonds issued by the reporting entity
• C) Acquisition of property, plant, and equipment with an issue of common stock
• D) Declaration and payment of dividends

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Definitions:

Acquisition

The process of obtaining control of another company by purchasing its assets, stock, or both.

Consolidated Statement

A financial statement that presents the financial position and results of operations for a parent company and its subsidiaries as a single entity.

Loss On Sale

The financial loss that occurs when the selling price of an asset is less than its carrying amount at the time of sale.

Operating Activity

Activities that constitute the primary or main activities of an organization, such as sales or services.