(Appendix) Equipment costing $12,000 was purchased for cash. This activity is classified as

Question

Quizplus · Accepted Answer

The purchase of equipment for cash is considered an investing activity because it involves the acquisition of a long-term asset that will generate future financial benefits. It is not an operating activity because it does not relate to the daily operations of the business, nor is it financing because it does not involve raising or repaying capital from investors or lenders. It is also not borrowing because the company is not taking out a loan.

(Appendix) Equipment Costing $12,000 Was Purchased for Cash