Question

When a transfer is made between cash and cash equivalents with no gain or loss, how is the transaction treated in the statement of cash flows?

Multiple Choice

• It is included as an operating activity.

• It is included as a noncash financing activity.

• It is included as an investing activity.

• It is not reported.

In a statement of cash flows:

Multiple Choice

• Operating activities can be reported by either the direct method or the operating method.

• One of the three primary reporting classifications of cash flows is financing activities.

• Investing activities can be reported by either the direct method or the indirect method.

• Financing activities can be reported by either the direct method or the financing method.

Moonland Company's income statement contained the following errors:
Ending inventory, December 31, 2018, understated by $7,500
Depreciation expense for 2018 overstated by $1,500
What is the effect of the errors on 2018 net income before taxes?

Multiple Choice

• Understated by $6,000.

• Understated by $9,000.

• Overstated by $9,000.

• Overstated by $6,000.

Answer 1

QUESTION-1

The right answer choice is “It is not reported“

When a transfer is made between cash and cash equivalents with no gain or loss, is not reported in the statement of cash flows.

QUESTION-2

In a statement of cash flows, One of the three primary reporting classifications of cash flows is financing activities.

The Option number-2 is correct

QUESTION-3

The effect of the errors on 2018 net income before taxes = Understatement of Ending inventory, on December 31, 2018 + Depreciation expenses overstated

= $7,500 + $1,500

= $9,000 (Understated)

Therefore, the answer choice is “Understated by $9,000”