Asked by Amanuel Mengistab on Jun 03, 2024
Verified
The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:
A) Operating activities.
B) Financing activities.
C) Investing activities.
D) Schedule of noncash financing and investing activities.
E) Reconciliation of cash balance.
Noncash Financing
Financing activities that do not involve cash flows, such as issuing stock for assets or converting debt to equity.
Investing Activities
Financial transactions related to the acquisition or sale of long-term assets and investments not related to the entity's primary business operations.
Financing Activities
Transactions and events where cash is raised or paid back to finance the company's operations, including issuing debt, equity, and paying dividends.
- Identify transactions that are considered noncash investing and financing activities and understand their disclosure.
Verified Answer
RJ
Rojenee JonesJun 03, 2024
Final Answer :
D
Explanation :
The purchase of long-term assets by issuing a note payable is considered a noncash transaction and is reported in the schedule of noncash financing and investing activities on the statement of cash flows, rather than affecting the cash flows directly in the operating, financing, or investing sections.
Learning Objectives
- Identify transactions that are considered noncash investing and financing activities and understand their disclosure.