Bowden Company Paid Cash to Purchase Two Identical Inventory Items

question 83

Multiple Choice

Bowden Company paid cash to purchase two identical inventory items. The first purchase cost $16.00 cash and the second cost $18.00 cash. Bowden sold one inventory item for $28.00 cash. Based on this information alone, without considering the effect of income tax,:

• A)cash flow from operating activities is $11.00 assuming a weighted average cost flow.
• B)cash flow from operating activities is $12.00 assuming a FIFO cost flow.
• C)cash flow from operating activities is $10.00 assuming a LIFO cost flow.
• D)the amount of cash flow from operating activities is not affected by the cost flow methoD.Regardless of the cost flow assumption, Bowden reported outflow of $34.00 for the purchases of the two items and inflow of $28.00 for the sale of one item.

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