KAJ Incorporated purchased a machine costing $250,000 by paying $35,000 and signing a $215,000 note payable.
-How would this transaction be reported within the cash flow from investing activities section of the cash flow statement?

Question

KAJ Incorporated purchased a machine costing $250,000 by paying $35,000 and signing a $215,000 note payable. 
-How would this transaction be reported within the cash flow from investing activities section of the cash flow statement?

Quizplus · Accepted Answer

The cash flow from investing activities section of the cash flow statement only includes actual cash transactions. Since KAJ Incorporated paid $35,000 in cash for the machine, this amount represents the cash outflow for investing activities. The note payable of $215,000 is a financing activity, not an investing activity.

KAJ Incorporated Purchased a Machine Costing $250,000 by Paying $35,000