MacDonald, Inc

question 66

Multiple Choice

MacDonald, Inc.owns 80 percent of the outstanding stock of Stahl Corporation.During the current year, Stahl made $125,000 in sales to MacDonald.How does this transfer affect the consolidated statement of cash flows?

• A) Include 80 percent as a decrease in the investing section.
• B) Include 100 percent as a decrease in the investing section.
• C) Include 80 percent as a decrease in the operating section.
• D) Include 100 percent as an increase in the operating section.
• E) Not reported in the consolidated statement of cash flows.

---

Definitions:

Upstream Price Discrimination

A pricing strategy where producers change prices at different stages of production or distribution, affecting the prices paid by retailers or further downstream sellers.

Arbitrage

The process of buying and selling assets or securities across different markets or forums to profit from price differences.

Vertical Contracts

Agreements between firms at different levels of the supply chain, such as between a manufacturer and a retailer, aimed at controlling or coordinating activities.

Costly Activities

tasks or operations that require a high expenditure of resources, such as time, money, or labor.