Which of the following is true regarding the Statement of Cash Flows for a private college?
A. Neither Cash Flows from Operating Activities must be presented on the direct method nor Cash purchases of capital assets are reported as outflows in the investing activities section is true.
B. Both Cash Flows from Operating Activities must be presented on the direct method and Cash purchases of capital assets are reported as outflows in the investing activities section are true.
C. Cash purchases of capital assets are reported as outflows in the investing activities section.
D. Cash Flows from Operating Activities must be presented on the direct method.
Answer: C
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A payment based directly on a sale or some other activity is called a:
A) commission. B) perk. C) spiff. D) trade allowance.
Which of the following is true regarding activity-based costing (ABC)?
A) The benefits of using ABC always outweigh its limitations. B) The lower the proportion of overhead costs as compared to direct materials and direct labor costs, the more likely a company will benefit by using ABC. C) Companies with a high-proportion of non-unit-level costs should rarely use ABC. D) High measurement costs associated with ABC may deter some companies from its use.
Sahali Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 9%. Sahali Trading Company then enters into an interest rate swap where it will pay LIBOR and receive a fixed 8% on a notional principal of $100 million. After all these transactions are considered, Sahali's cost of funds is __________.
A. 17% B. LIBOR C. LIBOR + 1% D. LIBOR - 1%
The controllability concept states that managers should be held responsible for:
A. all items over which they have decision-making authority. B. costs and revenues, but not investments in assets used in their division. C. fixed compensation items, but not contingent compensation items. D. only items that are allocated to their divisions on a per-unit basis.