Which of the Following Would Not Create a Cash Flow

question 70

Multiple Choice

Which of the following would not create a cash flow?

• A)Sale of equipment at book value.
• B)Purchase of a delivery truck.
• C)Payment of a cash dividend.
• D)The company converts bonds into common stock.

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Definitions:

Outstanding Common Stock

Shares that are issued by a company and held by investors, excluding any shares held as treasury stock by the company itself.

Annual Amortization

The systematic reduction of the cost (or other basis) of an intangible asset over a specified time period.

Retained Earnings

The portion of net income left over for the business after it has paid out dividends to its shareholders.

Initial Value Method

A method of accounting in which an investment is initially recorded at its cost without adjusting for changes in the market value over time.