In Preparing a Statement of Cash Flows, You Encountered the Following

question 80

Multiple Choice

In preparing a Statement of Cash Flows, you encountered the following transaction of February 1, 2013: acquired a small office building in exchange for 5,000 of our common shares; market value $15 per share. How should this transaction be reported on the Statement of Cash Flows?

• A) Report as a concurrent inflow and outflow of cash on the Statement of Cash Flows.
• B) Report as a noncash investing and financing activity.
• C) Not reported on the Statement of Cash Flows because it did not affect cash, but details explained in the disclosure notes.
• D) Report on a Statement of Cash Flows as an investing activity.

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Definitions:

Sake of Duty

Acting out of a sense of moral or ethical obligation rather than for personal gain or desire.

Maxim

A concise and general principle or rule of conduct, often serving as a guideline for behavior.

Hypotheticals

Hypotheticals refer to situations or scenarios that are imagined or speculated about, often used in reasoning or in discussing possible outcomes.

Principle

A basic principle or statement that forms the basis for a belief system or for logical thinking.