A Statement of Cash Flows Would Not Disclose the Effect

question 22

Multiple Choice

A statement of cash flows would not disclose the effect of which of the following transactions?

• A)Dividends received on stock investments
• B)Receiving cash from customers on product sales
• C)Discarding an asset that had been fully depreciated
• D)None of these answers are correct.

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Definitions:

Voluntary Liquidation

The process in which a company's directors choose to voluntarily wind up the company's affairs, distribute its assets to creditors, and officially dissolve the business.

Liquidation Preference

A term in financial agreements that specifies the order in which creditors and investors are paid in the event of a company's liquidation.

Judicial Dissolution

A legal process through which a court orders the dissolution or termination of an entity such as a corporation or partnership based on certain grounds laid by law.

Deadlocked Directors

A situation in a board of directors where members are evenly divided on an issue, preventing a decision from being made.