A Company Recently Bought a New Production Machine and Has

question 4

Multiple Choice

A company recently bought a new production machine and has incurred the following costs.All of the costs can be included in the cost of the asset except?

• A)Interest expense on the loan to finance the purchase after the asset is put into use.
• B)Freight, taxes and duties.
• C)Installation costs.
• D)Cost of training personnel to use the machine.

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Definitions:

Financing Activities

Transactions related to raising capital and repaying investors, including issuing debt, obtaining loans, and dividend payments.

Operating Activities

Activities that relate to the primary operations of a company, like sales, services, and product creation.

Investing Activities

Financial transactions related to the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Statement of Cash Flows

A financial document that summarizes the amount of cash and cash equivalents entering and leaving a company, essentially showing how the company raises and spends money.