Which of the Following Items About the Statement of Cash

question 75

Multiple Choice

Which of the following items about the statement of cash flows is correct?

• A)Non-cash expenses such as depreciation are deducted from net income with the indirect method in computing cash flows from operating activities.
• B)Cash equivalents are highly liquid investments with maturities at the date of purchase of less than three months.
• C)The acquisition of land by issuing bonds payable would not appear on the statement of cash flows.
• D)Cash paid for interest would be classified as a financing cash flow.

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Definitions:

Horn Effect

A cognitive bias causing negative traits or experiences with an individual to influence overall perception of them disproportionally.

Recency Effect

is the cognitive phenomenon where the most recently presented items or experiences are more likely to be remembered than those presented earlier.

Superimposing

The process of laying or placing one thing over another, typically so that both are still evident.