A Gain on the Disposal of a Long-Term Asset

question 19

Multiple Choice

A gain on the disposal of a long-term asset:

• A) Involves cash inflows.
• B) Involves cash outflows.
• C) Does not reflect any cash flow and is the result of an investing activity.
• D) Is the result of an investing activity.
• E) Does not reflect any cash flow.

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Definitions:

Cash Receipts

The total amount of money received by a business during a specific period.

Interest and Dividends

Income received from investments, with interest earned on debt investments and dividends received from equity investments.

Operating Activities

Tasks and transactions directly related to the primary business functions of providing goods or services to customers.

Statement of Cash Flows

A financial statement that compiles total data about every cash inflow a business gets from its operational activities and external funding sources, in addition to all cash outflows that cover the costs of business operations and investments in a specified timeframe.