If a Company Has Both an Inflow and Outflow of Cash

question 23

Multiple Choice

If a company has both an inflow and outflow of cash related to property plant and equipment the

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

---

Definitions:

Centrally Planned Economy

A type of economic system where decisions about production, investment, prices, and incomes are determined centrally by a government.

Capitalist Economy

A system of economy where the ownership of capital resources is in the hands of private individuals or companies, decisions regarding investments are privately made, and the determination of prices, output, and distribution of products is largely governed by the dynamics of competition in a free-market environment.

Price Mechanism

is the process by which the forces of supply and demand determine the price of goods and services in a market economy.

Circular Flow Model

An economic model illustrating the movement of goods, services, and money between households and businesses in an economy.