In a Statement of Cash Flows Using the Indirect Method

question 52

Multiple Choice

In a statement of cash flows using the indirect method, which of the following events would not be classified as an operating activity?

• A) a gain from sale of equipment
• B) the receipt of a cash dividend
• C) proceeds from the issuance of bonds
• D) interest expense paid on a loan

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Definitions:

Long-Term Debt

Debt obligations of a business that are due after more than one year, used to finance operations or major purchases.

Net Profit Margin Percentage

A profitability ratio that measures the percentage of net income generated from total revenue.

Used Equipment

Previously owned machinery or tools that are available for sale and use, often at a lower cost compared to new equipment.

Net Profit Margin Percentage

A financial ratio that indicates how much of each dollar of revenues is translated into profits, calculated by dividing net profit by revenue and multiplying by 100.