Question

Croft Company sold land costing $10,000 for $12,000. In the investing activities section of the statement of cash flows, the company will report:_________

Multiple Choice
A) An inflow of $2,000
B) An inflow of $12,000
C) An outflow of $10,000
D) An outflow of $12,000

Answer 1

The answer is: B) An inflow of $12,000

Step-by-step explanation:

Croft Company's cash flow should include the total cash inflow (the company received money) of $12,000. Even if the company bought the land the day before, paying the $10,000 yesterday, the cash flows are independent one from another. It should have recorded the outflow of $10,000 "yesterday".