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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Definitions:

Uncertainty Avoidance

A cultural dimension that describes the extent to which a society tolerates ambiguity and uncertainty.

Cultural Preference

The tendency of individuals or groups to favor certain beliefs, practices, or items because of cultural backgrounds.

Structured Situations

Scenarios or environments where the procedures, rules, and objectives are clearly defined and organized.

Exporting

The activity of selling goods or services produced in one country to buyers in other countries.