[Anonymous]

I see tons and tons of this type of questions, where it doesn’t indicate whether something is already included in something or not. What’s your strategy to solve this type of questions?

Like this one, how do I know if sale of land is included in the investing activity or not? If it’s included, the answer is C (correct answer), if not then it’s D…

New England Co. had net cash provided by operating activities of $351,000; net cash used by investing

activities of $420,000; and cash provided by financing activities of $250,000. New England’s cash balance

was $27,000 on January 1. During the year, there was a sale of land that resulted in a gain of $25,000 and

proceeds of $40,000 were received from the sale. What was New England’s cash balance at the end of the

year?

a. $27,000

b. $40,000

c. $208,000

d. $248,000

[Anonymous]

In that case I would have assumed that it was already included. They are just giving you “supplemental” distractor information, hoping that you will get confused. Try to follow your gut and don't feel like you HAVE to make use of all of the information in the question. If you don't think you need something in the question to arrive at the right answer, don't try to include it just because it's there.

[kb24]

FAR 4/1/11 - 89
AUD 4/15/11 - 85
REG 4/29/11 - 80
BEC 5/13/11 - 85

[Anonymous]

Wouldn't it have to be C? The gain on the sale would be an outflow when determining your cash flow from operations (if using the indirect method) and an inflow when determining your cash flow from investing activities. Net inflow of 15,000. Seeing as 223,000 is not a choice, I would have to go with C there.

[Anonymous]

**the proceeds would be an infow

[jimboace88]

It's a very poorly worded question, but I'm getting the sense that is the norm when it comes to CPA exam questions (no wonder people have to take these things so many times). It's like they are giving away some biiiiiig secret if they say “the sale of land has already been included in investing activity.” As if we couldn't find that out in the real world.

FAR 07/27/11 - 87
AUD 10/01/11 - 85
BEC 11/15/11 - 87
REG 01/03/12 - 92

[IwannaBaCPA]

make assumptions…you are either right or wrong and on the exam, you don't have the time to really contemplate what they mean in every single question…

BEC: 79 - April 2011
FAR: 78 - May 2011
AUD: 81 - May 2012
REG: 79 - October 2012
Ethics: Passed - March 2013
I am finally DONE!

[lyudainvegas]

Net Cash Operating activities $351000.00

Net Cash Investing Activities -$420000.00

Net Cash Provided by financing activities $250000.00

Cash at beginning of year $27000.00

Total cash at end of year $208000.00

Gain and proceeds are adjustments to Net cash provided by operating activities are included already in $351k

[lyudainvegas]

Opps gain and proceeds are adjustment in Net cash used by investing activites …

[young scholar]

questions like this make me wanna quit going for this bullshit license

[laslow]

Spoken like a young Scholar.

[Author]

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