Barker Company Paid Cash to Purchase Two Identical Inventory Items

question 2

Multiple Choice

Barker Company paid cash to purchase two identical inventory items.The first purchase cost $18.00 cash and the second cost $20.00 cash.Barker sold one inventory item for $30.00 cash.Based on this information alone,without considering the effect of income tax,:

• A)cash flow from operating activities is $11.00 assuming a weighted average cost flow.
• B)cash flow from operating activities is $12.00 assuming a FIFO cost flow.
• C)cash flow from operating activities is $10.00 assuming a LIFO cost flow.
• D)the amount of cash flow from operating activities is not affected by the cost flow method.

---

Definitions:

Dividend Elimination

The process of removing intercompany dividends out of consolidated profit to avoid double counting when preparing consolidated financial statements.

Dividend Revenue

Income received from owning shares in a company, typically distributed from the company’s profits at regular intervals to its shareholders.

Dividend Declared

A formal announcement by a company’s board of directors to pay a specified dividend to the company's shareholders, determining the amount and date of the payment.

Reverse Acquisition

A transaction where the entity being acquired ends up controlling the combined entity, essentially acquiring the company that formally takes it over.