A purchase of equipment for cash is:
A)Reported as an operating activity in the statement of cash flows.
B)Reported as an investing activity in the statement of cash flows.
C)Reported as a financing activity in the statement of cash flows.
D)None of these is correct.

Question

Quizplus · Accepted Answer

A purchase of equipment for cash is reported as an outflow of cash for investing activities in the statement of cash flows since it involves the acquisition of a long-term asset that is expected to generate revenue over its useful life. It does not fall under operating or financing activities.

A Purchase of Equipment for Cash Is