The acquisition of a building by issuing a mortgage note payable would be considered both an investing activity and ﬁnancing activity that do not affect cash and would be reported in the notes to the ﬁnancial statements.

Question

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Issuing a mortgage note payable to acquire a building would involve both investing activity (acquiring a long-term asset) and financing activity (incurring a long-term liability), but it would not affect cash flow. Therefore, it would be disclosed in the notes to the financial statements rather than in the statement of cash flows.

The Acquisition of a Building by Issuing a Mortgage Note