According to FASB Concept Statement No

question 19

Multiple Choice

According to FASB Concept Statement No.6,Elements of Financial Statements,companies routinely incur liabilities to acquire funds,goods,and services they need to operate or expand their business.Which of the following is an example of this?

• A)borrowing money obligates the company to repay the loan
• B)buying assets on credit obligates the company to obtain a loan
• C)using the knowledge,time,and skill of employees obligates the company to pay for their use
• D)using company owned assets obligates the company to pay for their use
• E)acquiring assets with a trade-in with cash obligates the company to pay for them
• F)both A and B
• G)both A and C
• H)both D and E

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Definitions:

Company's Own Stock

Shares that were issued and have been repurchased by the company itself, reducing the amount of outstanding stock on the open market.

Financing Activities

Activities that result in changes in the size and composition of the equity and borrowings of an entity, as shown in its cash flow statement.

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are listed directly.

FASB's Agenda

The Financial Accounting Standards Board's schedule of planned topics to discuss, with the aim of setting and improving accounting standards in the United States.