When Using the Indirect Method to Determine Operating Cash Flows

question 135

Multiple Choice

When using the indirect method to determine operating cash flows, where is the gain from selling a long-term investment recognized? (The proceeds from selling the investment are considered separately.)

• A)operating activity
• B)investing activity
• C)financing activity
• D)noncash investing or financing activity
• E)not reported on the statement of cash flows

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Definitions:

Bonds Payable

Bonds payable are long-term debts issued by corporations or governments, where the issuer promises to pay the bondholder a specific sum of money at future dates.

Common Stock

A type of equity security that represents ownership in a corporation, usually with voting rights.

Cash Dividends

Payments made by a company out of its profits to shareholders, usually in the form of cash.

Common Stock

A type of security that represents ownership in a corporation, giving holders voting rights and a proportionate share in the company's profits through dividends or capital appreciation.