Martin Company Is Preparing Its Statement of Cash Flows Using

question 22

Multiple Choice

Martin Company is preparing its statement of cash flows using the indirect method. During the year, they purchased equipment for $15,000 cash. Which of the following statements is true?

• A)$15,000 would be shown as a negative cash flow in the operating activities section.
• B)$15,000 would be shown as a negative cash flow in the investing activities section.
• C)$15,000 would be shown as a positive cash flow in the investing activities section.
• D)$15,000 would be shown as a positive cash flow in the financing activities section.

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Definitions:

Interest Rate

The percentage at which interest is charged or paid on borrowed or lent money over a specific period.

Originally Scheduled Payments

Originally scheduled payments refer to the payments planned and agreed upon at the outset of a loan or mortgage, before any adjustments or changes.

Replacement Payments

Payments made to compensate for goods or services that were faulty, damaged, or otherwise inadequate, ensuring the recipient receives what was originally contracted.

Interest Rate

A percentage that measures the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed.