A Building with a Book Value of $54,000 Is Sold

question 40

Multiple Choice

A building with a book value of $54,000 is sold for $63,000 cash Using the indirect method, this transaction should be shown on the statement of cash flows as follows:

• A) an increase of $54,000 from investing activities
• B) an increase of $63,000 from investing activities and a deduction from net income of $9,000
• C) an increase of $9,000 from investing activities
• D) an increase of $54,000 from investing activities and an addition to net income of $9,000

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Definitions:

Receivables Management

Practices and procedures used to manage amounts owed to a business by its customers, enhancing cash flow.

Note Disclosures

Additional information provided in financial reports that complements and clarifies the main financial statements, often detailing accounting policies and methodologies.

Financing Activities

Financing activities are transactions between a business and its financiers, such as issuing debt or equity, to raise capital or pay dividends.

Cash Flow Statement

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, separating activities into operating, investing, and financing.