Which of the Following Statements Is False

question 50

Multiple Choice

Which of the following statements is false?

• A) Purchase of equipment is an investing cash outflow.
• B) Sale of equipment creates investing cash outflow equal to its selling price.
• C) Purchase of short-term investments is an investing cash outflow.
• D) Purchase of a patent is an investing cash outflow.

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Definitions:

Overhead Costs

Indirect expenses related to the day-to-day running of a business, such as rent, utilities, and administrative costs, which are not directly tied to production or sales.

Direct Materials

Raw materials that can be directly attributed to the production of goods or services and are an integral part of the finished product.

Fixed Costs

Regular expenses that an entity incurs, which are not affected by changes in business activity levels, such as lease payments and insurance premiums, essential for financial planning.

Machine Setup Costs

Expenses incurred to prepare machinery for production, including calibration, cleaning, and testing.