Which of the Following Is Considered an Operating Activity on the Statement

question 15

Multiple Choice

Which of the following is considered an operating activity on the statement of cash flows prepared using the direct method?

• A) dividends paid to stockholders
• B) sale of merchandise inventory for cash
• C) payment to purchase equipment
• D) the receipt of cash from sale of equipment

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Definitions:

Intra-Entity Transfer

Refers to the movement of goods, services, or funds between different departments or units of the same organization.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against an asset, reflecting its reduction in value over time.

Amortization

The process of gradually writing off the initial cost of an intangible asset over a period, reflecting its consumption, expiration, or obsolescence.

Depreciation Adjustment

A financial reporting mechanism to allocate the cost of a tangible asset over its useful life.