When a company pays a supplier for inventory it has purchased, the cash outflow is recorded in the investing activities section of the statement of cash flows.

Question

Quizplus · Accepted Answer

The cash outflow for inventory purchased from a supplier is recorded in the operating activities section of the statement of cash flows, as it is a normal part of the company's ongoing business operations. Investing activities refer to cash flows related to the acquisition or disposal of long-term assets, such as property, plant, and equipment, or investments.

When a Company Pays a Supplier for Inventory It Has