A Company Acquired Land by Issuing Its Common Stock

question 19

Multiple Choice

A company acquired land by issuing its common stock. How should this transaction be disclosed when a statement of cash flows is prepared?

• A)In a supplemental schedule of noncash investing and financing activities or in a note.
• B)The acquisition of land should be reported as an investing activity and the issuance of the stock as a financing activity.
• C)In a separate section of the statement of cash flows.
• D)The transaction does not need to be disclosed.

Recognize the function and utilization of a lockbox system to enhance cash management.

Distinguish between current and long-term assets and liabilities.

Understand the basics of working capital management and its significance in financial management.

Identify various sources of short-term financing and understand their uses and costs.

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Definitions:

Marginal Costs

The financial outlay required to produce an additional unit of a product or service.

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.

Interest Rate

The percentage of a sum of money charged for its use, often expressed annually, affecting loans and savings.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.