Allen Company Bought a New Copy Machine to Be Depreciated

question 72

Multiple Choice

Allen Company bought a new copy machine to be depreciated straight line for three years. Where would this purchase be reflected on the Statement of Cash Flows?

• A)It would be an addition to property, plant and equipment, so it would be an investing activity.
• B)It would be an addition to cash, so would be reflected in the change in cash.
• C)It would be an expense on the income statement, so it would be reflected in operating cash flows.
• D)None of the above options is correct.

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Definitions:

Par Value

The face value of a bond or the stock value stated in the corporate charter, which is the nominal value of a security.

Semi-Annual Interest

Interest that is calculated and paid twice a year, commonly found in bonds and certain types of loans.

Coupon Rate

Interest yielded on a bond each year, displayed as a percentage of its face value.

Market Rate Of Interest

The prevailing rate of interest available in the marketplace for securities of similar risk and maturity.