Asked by Peter Bourgeois on Jun 11, 2024
Verified
A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under
A) investing activities
B) financing activities
C) noncash investing and financing activities
D) operating activities
Investing Activities
Investing activities involve the purchase and sale of long-term assets and other investments, not including cash equivalents, reflected in the cash flow statement of a company.
Statement Of Cash Flows
A report that captures the effects of changes in balance sheet accounts and income on the availability of cash and cash equivalents.
Equipment
Tangible property other than land or buildings that is used in operations of a business, such as machinery or office furniture.
- Identify the classification of cash flow activities (operating, investing, and financing) and specific transactions within each category.
- Determine the impact of equipment purchases, sales, and depreciation on cash flow statements.
Verified Answer
NM
Nadia MirzaJun 18, 2024
Final Answer :
A
Explanation :
The purchase of equipment with cash is considered an investing activity as it involves the acquisition of a long-term asset that will be used in the operations of the business for an extended period.
Learning Objectives
- Identify the classification of cash flow activities (operating, investing, and financing) and specific transactions within each category.
- Determine the impact of equipment purchases, sales, and depreciation on cash flow statements.