Suzanne Inc

question 65

Multiple Choice

Suzanne Inc.'s policy is to report all cash flows arising from interest and dividends in the operating activities section. The activities for the year ended December 31, 2021 included the following:
• Interest revenue for the period was $12,000. The interest receivable account decreased $3,000.
• Sold an Investment at FVOCI for $10,000. The original cost was $5,000.
Using the indirect method, how much would be presented as cash flow from operating activities?

• A)Proceeds from disposal in the amount of 10,000 + Interest received in the amount of 12,000.
• B)Proceeds from disposal in the amount of 10,000 + Interest received in the amount of 15,000.
• C)Gain on sale in the amount 5,000 + Interest received in the amount of 12,000.
• D)Adjustment to Net Income of -5,000 for the recycled gain on sale of the investment at FVOCI + Interest cash flow of +15,000.

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Definitions:

Rational-Ignorance Effect

A phenomenon where individuals decide not to acquire information because the cost of doing so outweighs the expected benefits.

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A branch of economics that studies the decision-making behaviors of voters, politicians, and government officials from the perspective of economic theory.