Wolff corporation owns 70% of the outstanding stock of Sanders, Inc. During the current year, Sanders made $75,000 in sales to Wolff. How does this transfer affect the consolidated statement of cash flows?
A) Included as a decrease in the investing section.
B) Included as an increase in the operating section.
C) Included as a decrease in the operating section.
D) Included as an increase in the investing section.
E) Not reported in the consolidated statement of cash flows.

Question

Quizplus · Accepted Answer

Intercompany sales are eliminated in consolidation, so they do not affect the consolidated statement of cash flows.

Wolff Corporation Owns 70% of the Outstanding Stock of Sanders