In preparing a statement of cash flows, which of the following transactions would be considered an investing activity?
A) Sale of merchandise on credit
B) Declaration of a cash dividend
C) Issuance of bonds payable at a discount
D) Sale of equipment at book value

Question

Quizplus · Accepted Answer

Sale of equipment at book value is an investing activity as it involves the sale of a long-term asset. Option A is a sale of merchandise, which is a normal course of business and is classified as an operating activity. Option B is a financing activity as dividends are paid to shareholders. Option C is a financing activity as bonds payable are a source of long-term financing for the company.

In Preparing a Statement of Cash Flows, Which of the Following