A Software Company Acquires a Smaller Company in Order to Acquire

question 94

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.
• E)as an inflow under Financial Activities

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Definitions:

Business Creditors

Individuals or institutions that a company owes money to due to past transactions, such as suppliers or banks.

Partnership

Association of two or more persons who operate a business as co-owners by voluntary legal agreement.

Debts

Money that is owed or due to be paid to another individual or entity.