An Example of a Transaction That Must Be Disclosed as a Noncash

question 152

Multiple Choice

An example of a transaction that must be disclosed as a noncash investing and financing activity includes:

• A)The retirement of debt by issuance of equity.
• B)The purchase of long-term assets financed by a cash down payment and a note payable to the seller for the balance.
• C)The leasing of assets in a transaction that qualifies as a capital lease.
• D)The purchase of noncash assets in exchange for equity or debt securities.
• E)All of the choices are examples of noncash investing and financial activities.

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Definitions:

Equity

The value that would be returned to shareholders if all the assets of a company were liquidated and all its debts paid off. It represents ownership interest in the company.

FIFO Method

A stock valuation and inventory management method where the first items acquired are the first ones to be sold, known as First-In, First-Out.

Inventory Costs

Costs associated with acquiring, storing, and managing inventory, including purchase costs, storage costs, and potential obsolescence.

Balance Sheet

A report detailing a firm's assets, liabilities, and equity held by shareholders at a particular moment.