A Software Company Acquires a Smaller Company in Order to Acquire

question 63

Multiple Choice

A software company acquires a smaller company in order to acquire the patents that it holds.Where will the cost of this acquisition be recorded on the statement of cash flows?

• A)as an outflow under Operating Activities
• B)as an outflow under Investment Activities
• C)as an outflow under Financial Activities
• D)The acquisition would not be recorded on the statement of cash flows.

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Definitions:

Filtration

A process that separates substances into solutions by forcing them across a membrane.

Bowman's Capsule

A cup-like sack at the beginning of the tubular component of a nephron in the kidney that performs the first step in the filtration of blood to form urine.

Glomerulus

A network of tiny blood vessels located within the kidney that functions in the filtration process of blood to form urine.

Proximal Convoluted

Refers to the Proximal Convoluted Tubule, a part of the nephron in the kidney involved in the reabsorption of water and ions from the filtrate.