Strawbale,Inc.purchases a $600,000 building,paying $400,000 in cash and signing a $200,000 promissory note.What will be reported on the statement of cash flows as a result of this transaction?

Question

Quizplus · Accepted Answer

All companies are required to report material investing and financing transactions that did not have cash flow effects (called noncash investing and financing activities).The cash paid in this transaction would be reported as a $400,000 cash outflow from investing activities and a supplementary disclosure would be made for the $200,000 noncash investing and financing activity.