Allen Company Bought a New Copy Machine to Be Depreciated

question 1

Multiple Choice

Allen Company bought a new copy machine to be depreciated straight line for three years. Where would this purchase be reflected on the Statement of Cash Flows?

• A) It would be an addition to property, plant and equipment, so it would be an investing activity.
• B) It would be an expense on the income statement, so it would be reflected in operating cash flows.
• C) It would be an addition to cash, so would be reflected in the change in cash.
• D) None of the above answers is correct.

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Definitions:

Negligently

Acting with a lack of reasonable care or concern for the consequences, leading to potential harm or damage.

Legal Detriment

A concept in contract law where a party receives something of value in exchange for foregoing a legal right, forming a basis for a binding agreement.

Legal Benefit

An advantage or gain, especially in a contractual context, that a party receives, which constitutes consideration necessary for a valid contract.

Unilateral Contract

A contract in which only one party makes a promise or undertakes a performance, while the other side only has to perform if they choose to.