How is the purchase of a capital asset with cash recorded in the cash flow statement?

Question

Quizplus · Accepted Answer

When a capital asset is purchased with cash, it represents a decrease in the cash balance of the company. This decrease in cash is recorded in the "cash flows from investing activities" section of the cash flow statement, as the purchase of a capital asset is considered an investing activity. Therefore, option B is the correct answer. Option A and C are incorrect as they are opposite to the correct answer. Option D is also incorrect as depreciation is a non-cash expense and is not recorded in the cash flow statement as cash flow.

How Is the Purchase of a Capital Asset with Cash