J Corp.entered into an operating lease in February.The company's December 31 statement of cash flows will report:
A)A cash outflow from investing activities.
B)A cash outflow from financing activities.
C)A cash outflow from operating activities.
D)No cash outflow.

Question

Quizplus · Accepted Answer

An operating lease is considered an operating activity, so the cash flow related to it will be reported under operating activities on the statement of cash flows. There may be no cash outflow if the lease payments are made in the future, but if any payments were made during the current period, they would be reported as a cash outflow under operating activities. There would be no impact on investing or financing activities.

J CorpEntered into an Operating Lease in February