The Acquisition of Land by Issuing Common Stock Is

question 145

Multiple Choice

The acquisition of land by issuing common stock is

• A) a noncash transaction which is not reported in the body of a statement of cash flows.
• B) a cash transaction and would be reported in the body of a statement of cash flows.
• C) a noncash transaction and would be reported in the body of a statement of cash flows.
• D) only reported if the statement of cash flows is prepared using the direct method.

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Definitions:

Debit Balances

Accounts on the left-hand side of a double-entry bookkeeping system that typically signify assets or expenses.

Permanent Account

An account that carries its ending balance over from one accounting period to the next, such as assets, liabilities, and equity accounts.

Doubtful Accounts

Accounts receivable that a company believes it may not be able to collect, often leading to the creation of an allowance for doubtful accounts.

Debits

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet or in its income statement.