Which of the following transactions would not create a cash flow?
A) Payment of a cash dividend.
B) The company purchased some of its own stock from a stockholder.
C) Amortization of patent for the period.
D) Sale of equipment at book value (i.e.no gain or loss).

Question

Which of the following transactions would not create a cash flow? 
A) Payment of a cash dividend.
B) The company purchased some of its own stock from a stockholder.
C) Amortization of patent for the period.
D) Sale of equipment at book value (i.e.no gain or loss).

Quizplus · Accepted Answer

The amortization of a patent does not involve any cash transaction, it only represents the gradual allocation of the cost of the asset over its useful life. The other options involve actual cash inflows or outflows: a cash dividend is a distribution of profits to shareholders, the purchase of stock implies a cash payment to the seller, and the sale of equipment leads to a cash inflow at the amount received.

Which of the Following Transactions Would Not Create a Cash