If a Company Has Both an Inflow and Outflow of Cash

question 102

Multiple Choice

If a company has both an inflow and outflow of cash related to the acquisition of equipment for $15,000 cash and the sale of machinery for $10,000 cash, the

• A)two cash effects can be netted and presented as one item in investing activities.
• B)cash inflow from the sale and cash outflow for the acquisition should be reported separately in investing activities.
• C)two cash effects can be netted and presented as one item in financing activities.
• D)cash inflow and cash outflow should be reported separately in financing activities.

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Definitions:

Compounded Monthly

The method of computing interest that includes both the original amount of money deposited or loaned and the interest that amount has earned in past months.

Amortized

The process of spreading payments over multiple periods, typically in context of a loan or mortgage, which includes both interest and principal components.

Compounded Semi-annually

Refers to the process where interest is calculated and added to the principal balance of an investment or loan twice a year.

Amortized

The process of spreading out a loan into a series of fixed payments over time.