On an Indirect Method Statement of Cash Flows,the Purchase of Machinery

question 37

Multiple Choice

On an indirect method statement of cash flows,the purchase of machinery in exchange for common shares is:

• A) ignored
• B) shown in the schedule of noncash investing and financing activities which accompanies the statement of cash flows
• C) reflected in the operating activities section
• D) reflected in the investing activities section

Grasp the rights and privileges of common shareholders, including preemptive rights.

Identify how market value and par value differ and how each is used in corporate finance.

Understand the concept of authorized, issued, and outstanding stock.

Comprehend the role and responsibilities of a corporation’s board of directors.

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Definitions:

Diseconomies of Scale

The condition when a company grows so large that the costs per unit increase, causing a decrease in efficiency.

Coordinating

The organization and alignment of activities, processes, or efforts to ensure efficient and effective achievement of goals or outcomes.

Managing

The process of planning, organizing, leading, and controlling resources to achieve specific goals.

Long-Run Average Total Cost Curve

A curve that shows the lowest possible cost of producing different levels of output when all factors of production, including capital, can be varied.