At the End of the Current Year, a Company Purchased

question 73

Multiple Choice

At the end of the current year, a company purchased and paid cash of $100,000 for a piece of equipment to be used for several years in the business. Choose the TRUE statement.

• A) On the Statement of Cash Flows, $100,000 will be shown as a cash inflow from investing activities.
• B) On the Statement of Cash Flows, $100,000 will be shown as a cash outflow from financing activities.
• C) On the Balance Sheet at the end of the year, Total Assets will not change as a result of this purchase.
• D) On the Income Statement, $100,000 will be reported as Equipment Expense.

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Definitions:

Cartel

An association of manufacturers or suppliers agreed upon restricting competition and controlling prices within a particular industry, often to maximize collective profits.

Cheat

The act of acting dishonestly or unfairly in order to gain an advantage, especially in a game, examination, or competition.

Collusion

A secret or illicit cooperation or conspiracy, especially between parties to deceive or defraud others, often used in the context of businesses agreeing on prices.

Marginal Cost

The expenditure involved in the production of one more unit of a product or service.