Hollander Company gave a long-term note payable in the amount of $285,000 to acquire a new piece of equipment.This transaction will be reported on the statement of cash flows as a _____.
A)$285,000 investing outflow and $285,000 financing inflow
B)$285,000 operating outflow and $285,000 financing inflow
C)$285,000 investing inflow and $285,000 financing outflow
D)noncash transaction reported in a separate schedule

Question

Quizplus · Accepted Answer

This transaction is considered a noncash investing and financing activity because the equipment was acquired through financing (a note payable) rather than through direct cash payment. Therefore, it does not appear in the cash flows from operating, investing, or financing activities sections but is disclosed in a separate schedule of noncash transactions.

Hollander Company Gave a Long-Term Note Payable in the Amount