A transaction that would appear as an application of funds on a conventional funds statement using the all-financial-resources concept, but not on a statement using the traditional working capital concept would be the
A) Acquisition of property, plant, and equipment for cash
B) Reacquisition of bonds issued by the reporting entity
C) Acquisition of property, plant, and equipment with an issue of common stock
D) Declaration and payment of dividends

Question

Quizplus · Accepted Answer

Under the traditional working capital concept, only current assets and current liabilities are considered in the funds statement. Therefore, the acquisition of property, plant, and equipment through the issue of common stock would not be reflected as an application of funds in the statement. However, under the all-financial-resources concept, all assets and liabilities, both current and non-current, are considered in the funds statement, and the acquisition of property, plant, and equipment with the issue of common stock would be reflected as an application of funds.

A Transaction That Would Appear as an Application of Funds