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The purchase of an office building by issuing long-term notes payable should be reported as a: cash outflow in the financing section of the statement of cash flows
The purchase of an office building by issuing long-term notes payable should be reported as a:
-
- cash outflow in the financing section of the statement of cash flows.
- cash outflow in the investing section of the statement of cash flows.
- cash outflow in the operating section of the statement of cash flows.
- noncash investing and financing activity.
Expert Solution
Answer: d .
Option D is the correct answer.
It is an non cash investing and financing activity as it does not involve any inflow and outflow of cash .
Generall , Purchase of building is an investing activity and issue of long term notes payable is an financing activity . But in the given case building is purchased by the issue of long term note payable ,not involving any inflow and outflow of cash . Therefore it is an non cash investing and financing activity.
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