Allen Company Bought a New Copy Machine to Be Depreciated

question 3

Multiple Choice

Allen Company bought a new copy machine to be depreciated straight line for three years for use by sales personnel. Where would this purchase be reflected on the Statement of Cash Flows?

• A) It would be an expense on the income statement so it would be reflected in operating cash flows.
• B) It would be an addition to property, plant and equipment so it would be an investing activity.
• C) It would be an addition to cash so it would be reflected in the change in cash.
• D) None of the above answers is correct.

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Definitions:

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price in a given time period.

Supply

The overall quantity of a particular product or service accessible to buyers.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to market balance.