Which of the Following Does Not Represent an Outflow of Cash

question 37

Multiple Choice

Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash?

• A) purchase of noncurrent assets
• B) purchase of treasury stock
• C) discarding an asset that had been fully depreciated
• D) payment of cash dividends

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Definitions:

Marginal Propensity

Describes the portion of additional income that an individual is willing to spend on consumption rather than saving.

Off-Balance Sheet Financing

Off-balance sheet financing is the use of funding or financial activities not recorded on the company's balance sheet to keep debt ratios low.

Capitalizing A Lease

The process of recognizing a leased asset and related lease liability on the balance sheet, treating the lease as a purchase financed by a loan.

Capital Lease

A lease considered a purchase of an asset for accounting purposes, where the lessee acquires all risks and rewards associated with ownership.