The Gain on the Sale of a Long-Term Investment Should

question 23

Multiple Choice

The gain on the sale of a long-term investment should be disclosed separately in a Statement of Cash Flows of a company with substantial operating profits as a(n) :

• A) Adjustment to net income in the reconciliation of net income to cash from operating activities.
• B) Outflow from operating activities.
• C) Outflow from investing activities.
• D) Inflow from financing activities.

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Definitions:

Opportunity Cost

The forgone value of what you give up when you make a choice.

Total Output

The aggregate quantity of goods and services produced within an economy over a specific period, reflecting the economy's overall productivity.

Comparative Advantage

The ability of an entity to produce a good or offer a service at a lower opportunity cost than another.

Absolute Advantage

The ability of a country to produce a good at a lower cost than its trading partners.