Melo's Purchased a $25,000 Truck for Catering from Its Restaurant

question 2

Multiple Choice

Melo's purchased a $25,000 truck for catering from its restaurant.It made a down payment of one-fourth of the price.What combination of amounts would affect the income statement and statement of cash flows for the purchase of the truck? Statement of Income
Cash Flow Statement

• A)$ -0- $25,000
• B)($25,000) $ -0-
• C)($ 6,250) $25,000
• D)($ 6,250) $ -0-

---

Definitions:

Equity Method

A technique where an investor reflects its share of an associate's or joint venture's profits or losses in its own financial statements, affecting the carrying value of the investment.

Income Recognition

The process of reporting income when it is earned and realized or realizable, according to accounting principles.

Intra-entity Sales

Transactions occurring between two divisions or subsidiaries within the same parent company, often reflecting internal transfers of goods and services.

Equity Income

Income earned by an investor from an investment in stocks, representing dividends and other distributions from equity investments.