Question

Which of the following statements is true? Investment in another company's common stock is classified as...

Which of the following statements is true?

  • Investment in another company's common stock is classified as a cash outflow from financing activities in the statement of cash flows.

  • Repayment of long-term debt is classified as a cash outflow from investing activities in the statement of cash flows.

  • Losses on the sale of long-term assets are an adjustment reported in the operating activities section of the statement of cash flows under the indirect method.

  • Dividends paid are classified as a cash outflow from operating activities in the statement of cash flows.

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Homework Answers

Answer #1

True: Losses on the sale of long-term assets are an adjustment reported in the operating activities section of the statement of cash flows under the indirect method.

Explanation:

Losses from sale of an asset is an adjustment whose effect is required to be removed from net income to find out cash flow from operating activities.

All other are false.

Repayment of long-term debt is classified as a cash outflow from financing activities and not investing activities..

Investment in another company's common stock is classified as a cash outflow from investing activities and not financing activities.

Dividends paid are classified as a cash outflow from financing activities and not operating activities.

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