Which of the Following Transactions or Events Should Be Reported

question 150

Multiple Choice

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

• A) Credit sales.
• B) Cash collections from customers.
• C) Depreciation expense.
• D) Cash received from the sale of a building.
• E) Cash received from the sale of treasury shares.

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Definitions:

Deadweight Losses

Economic inefficiencies that occur when the allocation of resources is not optimal, resulting from distortions in the market such as taxes, subsidies, or monopolies.

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price for each unit consumed that each buyer is willing to pay, thus capturing the entire consumer surplus as profit.

Total Revenue

The total income received by a firm from its sales of goods or services before any costs or expenses are deducted.

Arbitrage

The practice of buying and selling a commodity or financial instrument in different markets to profit from differing prices for the same asset.