Northbrook Corporation is preparing a statement of cash flows.The following transactions occurred during the year:
1)Sold machinery for $9,000 cash.
2)Purchased a building for $80,000 cash.
3)Issued $70,000 worth of stock to acquire an airplane.
4)Converted long-term bonds by issuing $100,000 worth of stock.
5)Declared and paid a $10,000 cash dividend.
-Transaction 3 would be found on the statement of cash flows in the
A)cash flows from operating activities section.
B)cash flows from financing activities section.
C)noncash investing and financing transactions section.
D)cash flows from investing activities section.

Question

Northbrook Corporation is preparing a statement of cash flows.The following transactions occurred during the year: 
1)Sold machinery for $9,000 cash.
2)Purchased a building for $80,000 cash.
3)Issued $70,000 worth of stock to acquire an airplane.
4)Converted long-term bonds by issuing $100,000 worth of stock.
5)Declared and paid a $10,000 cash dividend.
-Transaction 3 would be found on the statement of cash flows in the
A)cash flows from operating activities section.
B)cash flows from financing activities section.
C)noncash investing and financing transactions section.
D)cash flows from investing activities section.

Quizplus · Accepted Answer

Transaction 3 involves issuing stock to acquire an airplane, which is a noncash transaction. Noncash investing and financing activities are disclosed in a separate section of the statement of cash flows or in the notes to the financial statements, not in the main body that reports cash inflows and outflows.

Northbrook Corporation Is Preparing a Statement of Cash Flows