In Preparing a Statement of Cash Flows, Which of the Following

question 45

Multiple Choice

In preparing a statement of cash flows, which of the following transactions would be considered an investing activity?

• A) Sale of merchandise on credit
• B) Declaration of a cash dividend
• C) Issuance of bonds payable at a discount
• D) Sale of equipment at book value

---

Definitions:

Operating Activities

Activities that are directly related to the primary operations of the company, including cash inflows and outflows from selling products and services.

Indirect Method

A financial reporting approach to prepare the cash flow statement where non-cash activities are adjusted to the net income to calculate cash flow from operating activities.

Statement of Cash Flows

A financial statement that details the inflows and outflows of cash within a company during a specific period.

Cash Receipts

The collection of money (cash, checks, electronic transfers) by a business from its customers, either for goods sold or services provided.