A Corporation Uses the Indirect Statement of Cash Flows

question 6

Multiple Choice

A corporation uses the Indirect Statement of Cash Flows. A fixed asset has been sold for $25,000 representing a gain of $3,750. The value in the operating activities section regarding this event would be:

• A) $25,000
• B) ($3,750)
• C) $28,750
• D) $3,750

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Definitions:

Transferred Out

Costs or materials moved from one department, process, or location to another in the course of manufacturing or accounting.

Effectiveness Measure

An evaluation metric to assess the degree to which objectives or goals are achieved, often used in performance management.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully equivalent completed units.

Physical Units

A measure used in manufacturing and production to count the actual units produced, irrespective of the production stage.