Oregon Company Is Preparing Its Statement of Cash Flows Using

question 47

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.

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Definitions:

Goodwill

An intangible asset that arises when a company acquires another company for more than the fair value of its net identifiable assets.

Accounts Receivable

Represents money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Inventories

Assets held for sale in the ordinary course of business, or goods that will be used or consumed in the production of goods to be sold.

Gross Profit

The difference between revenue and the cost of goods sold before deducting operating expenses, interest, and taxes.