J Corp Acquired an Asset Using an Operating Lease in February

question 25

Multiple Choice

J Corp. acquired an asset using an operating lease in February. The company's December 31 statement of cash flows will report

• A)a cash outflow from investing activities.
• B)a cash outflow from financing activities.
• C)a cash outflow from operating activities
• D)no cash outflow.Rent payments for operating leases are reported in a statement of cash flows as financing activities by the lessee and investing activities by the lessor.

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Definitions:

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

Investment Turnover

A ratio that measures the efficiency of a company in using its investments to generate sales revenue, reflecting how effectively assets are being utilized.

Operating Income

The amount of profit realized from a business's operations after deducting operating expenses like wages, depreciation, and cost of goods sold.

Invested Assets

Items acquired or bought with the intention of earning income or profit.