Which of the Following Transactions Would Not Create a Cash

question 7

Multiple Choice

Which of the following transactions would not create a cash flow? 

• A) Payment of a cash dividend.
• B) The company purchased some of its own stock from a stockholder.
• C) Amortization of patent for the period.
• D) Sale of equipment at book value (i.e.no gain or loss).

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Definitions:

Liability Account

An account on the balance sheet indicating obligations or amounts owed to others that will require a future outlay of resources.

Recording

The process of documenting financial transactions in the accounting records.

Common Stock

A type of equity security that represents ownership in a corporation, granting holders voting rights and a share in the company's profits via dividends.

Revenue Account

An account that tracks the income earned by a company before any expenses are deducted, often classified by source.