When Preparing the Statement of Cash Flows Using the Indirect

question 71

Multiple Choice

When preparing the statement of cash flows using the indirect method,the purchase of equipment would appear as

• A) a use of cash in the investing activities section
• B) a source of cash in the investing activities section
• C) a use of cash in the financing activities section
• D) a source of cash in the financing activities section

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Definitions:

Potential Borrowers

Individuals or entities who may be interested in or eligible for taking out a loan but have not yet entered into a borrowing agreement.

Regulation Z

A federal law that provides protection for consumers in credit transactions and is part of the Truth in Lending Act.

Truth-In-Lending Act

A federal law designed to promote informed use of consumer credit by requiring disclosures about terms and costs.

Retail Installment Sale

A transaction where the buyer pays for goods in regular installments while the seller retains ownership until the full price has been paid.