A Building with a Book Value of $54,000 Is Sold

question 40

Multiple Choice

A building with a book value of $54,000 is sold for $63,000 cash Using the indirect method, this transaction should be shown on the statement of cash flows as follows:

• A) an increase of $54,000 from investing activities
• B) an increase of $63,000 from investing activities and a deduction from net income of $9,000
• C) an increase of $9,000 from investing activities
• D) an increase of $54,000 from investing activities and an addition to net income of $9,000

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Definitions:

Price Taker

An economic term referring to a company or an individual that cannot control the market price of its product and must accept the prevailing market price.

Total Revenue

The aggregate revenue a corporation generates from sales or services in a given time frame.

Economic Profits

The profit a company makes after accounting for both the explicit costs of production and the opportunity costs of capital.

Long Run

A period in which all factors of production and costs are variable, typically allowing for full adjustment to changes.