Oregon Company Is Preparing Its Statement of Cash Flows Using

question 147

Multiple Choice

Oregon Company is preparing its statement of cash flows using the indirect method. During the year, the company purchased equipment for $15,000 cash. Which of the following statements is true?

• A) $15,000 would be shown as a negative cash flow in the operating activities section.
• B) $15,000 would be shown as a negative cash flow in the investing activities section.
• C) $15,000 would be shown as a positive cash flow in the investing activities section.
• D) $15,000 would be shown as a positive cash flow in the financing activities section.

Analyze the financial impact of further processing products beyond the split-off point.

Calculate minimum selling price for special orders and its impact on profitability.

Determine the relevance of costs in making short-term decision-making.

Assess the financial implications of discontinuing a product.

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Definitions:

Supplies Account

An account used to track the cost of supplies bought and used by a business over a period.

Supplies Expense

Supplies expense refers to the cost of consumable supplies used during an accounting period, recognized as an expense on the income statement.

Physical Count

The actual counting of inventory items, typically performed at the end of an accounting period to verify records.

Revenue Recognition Principle

A rule in accounting that outlines the exact circumstances in which income is considered as earned and documented.