At the Beginning of the Year,a Firm Leased Equipment on a Capital

question 27

Multiple Choice

At the beginning of the year,a firm leased equipment on a capital lease,capitalizing $50,000 in both its lease liability and leased assets accounts.The contract calls for payments each December 31 of $10,000.The lessee's annual reporting period ends December 31 and the contract reflects 10% interest.The lessee made the first payment as required.Which of the following should be reflected on the statement of cash flows under the indirect method for the first year of the contract (ignoring noncash disclosures) ?

• A) $10,000 financing cash outflow
• B) $10,000 operating cash outflow
• C) $5,000 operating cash outflow;$5,000 financing cash outflow
• D) $5,000 addition in the reconciliation of earnings and net operating cash flow

---

Definitions:

Dependable

Capable of being trusted or relied upon consistently.

Biopsychologist

A scientist who studies the biological basis of behavior, often exploring how the brain and nervous system influence thoughts, feelings, and actions.

Nervous System

The network of nerve cells and fibers that transmits nerve impulses between parts of the body, essential for sensing, thinking, and controlling muscles.

Behavior

Observations of an individual's actions and reactions in various situations, often studied in psychology to understand the underlying mechanisms and influences.