Which of the Following Items Would Be Included as an Operating

question 51

Multiple Choice

Which of the following items would be included as an operating activity on the statement of cash flows, using the direct method?

• A)purchase of treasury stock
• B)payment of dividends
• C)issuance of stock
• D)payment of interest expense

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds; it is the price paid for the use of borrowed money, or, for corporations, the price paid for the use of borrowed capital.

Contingent Liability

A potential financial obligation that may arise in the future depending on the outcome of an uncertain event or situation.

Probable Loss

A loss in financial terms that is likely to occur based on current information and judgment.

Reasonably Possible

A term used in accounting to describe a condition that could occur, affecting financial decisions or disclosures, based on current knowledge and events.