The Appropriate Section in the Statement of Cash Flows for Reporting

question 85

Multiple Choice

The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:

• A)Operating activities.
• B)Financing activities.
• C)Investing activities.
• D)Schedule of noncash investing or financing activity.
• E)None of these.This is not reported on the statement of cash flows.

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Definitions:

Pretax Income

Pretax income is the amount of income earned by a business before taxes have been deducted.

Fixed Costs

Costs that do not change with the level of production or sales volume, such as rent or salaries.

Variable Costs

Costs that vary in direct proportion to changes in the level of production or sales volume.

Sales

Transactions involving the exchange of goods or services for money, contributing to a company's revenue.