A Company Purchases Land Using Its Common Stock

question 60

Multiple Choice

A company purchases land using its common stock. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

• A)The purchase of land would be presented in the financing activities section as a cash payment under both methods.
• B)The purchase of land would be presented in the investing activities section as a cash payment under both methods.
• C)The purchase of land would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.
• D)The purchase of land would be presented in the non-cash investing and financing activities section under both methods.

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Definitions:

Gasoline Demanded

The total amount of gasoline that consumers are willing to buy at a given price, typically influenced by factors such as price and personal income.

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in the price of that good.

Consumer Demand

The desire of purchasers, consumers, or buyers for a particular good or service supported by the ability and willingness to pay for it.

Midpoint Formula

A method used in economics to calculate the elasticity of demand or supply, measuring the relative response to changes in price or income, based on the average of initial and final values.