The Statement Concerning the Treatment of the Purchase and Sale

question 1

Multiple Choice

The statement concerning the treatment of the purchase and sale of non-current assets in a statement of cash flows that is incorrect is:

• A)The carrying value of a non-current asset that has been sold is treated as an investing outflow
• B)The proceeds of sale from a non-current asset are treated as an investing inflow
• C)The cash purchase of a non-current asset is treated as an investing outflow
• D)Inflows and outflows for the purchase and sale of non-current assets must not be netted off against each other

Calculate and defer intra-entity gross profit from inventory transfers.

Determine the gain or loss on intra-entity asset transfers.

Analyze and prepare consolidation entries related to inventory and equipment transfers.

Recognize and compute income effects of intra-entity land sales between parent and subsidiary.

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Definitions:

Tohoku Earthquake

A magnitude 9.0 earthquake that struck off the coast of Japan on March 11, 2011, triggering massive tsunamis and leading to significant loss of life and the Fukushima Daiichi nuclear disaster.

Supply Chains

Networks of individuals, organizations, resources, activities, and technology involved in the production and sale of a product, from the delivery of source materials from the supplier to the manufacturer, and eventually to the end user.

Manufacturers

Companies or individuals that produce finished goods from raw materials through the use of various tools, equipment, and processes.

Disaster Risk

The potential loss or damage that can occur due to natural or man-made disasters.