Question

How should the purchase of equipment financed by the issuance of notes payable be reported on...

How should the purchase of equipment financed by the issuance of notes payable be reported on the statement of cash flows?

Cash flows from financing activity.

Cash flows from investing activity.

Cash flows from both investing and financing activities.

Noncash investing and financing activity.
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Answer #1

purchase of equipment financed by the issuance of notes payable be reported on the statement of cash flows as Noncash investing and financing activity.

Fourth option is the correct option

Purchase equipment by issuing note payable is a non cash activity. It does not involve any cash.

It involves investing activity in the form of purchase of equipment and it involves financing activity in the form of issue of note payable.

Thus, it is termed as Noncash investing and financing activity.

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