Which of the Following Statements Is True About the Consolidated

question 27

Multiple Choice

Which of the following statements is true about the consolidated statement of cash flows?

• A)​The purchase of intercompany bonds from parties outside the consolidated group is treated as a retirement of consolidated debt; the payment is reported as a cash outflow from financing activities.
• B)​The purchase of intercompany bonds from parties outside the consolidated group is treated as a retirement of consolidated debt; the payment is reported as a cash outflow from investing activities.
• C)​Intercompany interest payments and amortization of premiums and/or discounts on intercompany bonds are reported in the operating activities section of the statement.
• D)Intercompany interest payments and amortization of premiums and/or discounts on intercompany bonds are reported in the investing activities section of the statement.​

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Definitions:

Target Income

The specific amount of net income that a company aims to achieve for a certain period.

Investment Turnover

Investment turnover measures how efficiently a company generates sales from its investment in fixed assets.

Profit Margin

The percentage of revenue remaining after all expenses, taxes, and costs have been deducted from total sales.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the net profit by the cost of the investment.