In Preparing a Statement of Cash Flows, the Reconciliation of Net

question 17

Multiple Choice

In preparing a statement of cash flows, the reconciliation of net income to cash from operating activities does not include

• A) loss on sale of operational assets.
• B) bond discount or premium amortization for the period.
• C) gain on sale of debt and equity securities classified as Trading Securities.
• D) adjustment to record debt or equity securities classified as Securities Available for Sale at fair value.

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Definitions:

Goodwill Impairment

The process of reducing the book value of goodwill on the balance sheet if the fair value of the entity is less than its carrying amount.

Intercompany Sales

Transactions involving the exchange of goods or services between subsidiaries of the same parent company.

After-Tax Dollar Value

The net value of an investment, income, or transaction after accounting for the effects of income taxes.

Realized Profits

The gains earned and received from the sale of assets or investments.