A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable.The entire $150,000 is reported as a cash outflow in the financing section of the statement of cash flows.

Question

Quizplus · Accepted Answer

The $50,000 paid in cash would be reported as a cash outflow in the financing section, but the $100,000 note payable would be reported as a non-cash transaction in the investing or financing section (depending on the nature of the equipment). Therefore, only $50,000 would be reported as a cash outflow in the financing section.

A Company Purchased Equipment for $150,000 by Paying $50,000 and Signing