In Preparing a Statement of Cash Flows, You Encountered the Following

question 80

Multiple Choice

In preparing a Statement of Cash Flows, you encountered the following transaction of February 1, 2013: acquired a small office building in exchange for 5,000 of our common shares; market value $15 per share. How should this transaction be reported on the Statement of Cash Flows?

• A) Report as a concurrent inflow and outflow of cash on the Statement of Cash Flows.
• B) Report as a noncash investing and financing activity.
• C) Not reported on the Statement of Cash Flows because it did not affect cash, but details explained in the disclosure notes.
• D) Report on a Statement of Cash Flows as an investing activity.

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Definitions:

Whole-Life Insurance

A type of permanent life insurance policy that offers a death benefit alongside a savings account component, covering the insured for their entire life.

Long-Term Bonds

Debt securities with maturities typically longer than 10 years, offering regular interest payments and repayment of principal at maturity.

Life Insurance Firms

Companies that provide financial compensation to beneficiaries upon the death of the insured person.

Death Benefit

The sum paid to a policyholder's beneficiaries upon their death, typically in life insurance and annuities.