A company purchases land using its common stock. Where would this transaction appear when the company prepares the statement of cash flows?
A) The purchase of land would be presented in the financing activities section as a cash payment.
B) The purchase of land would be presented in the investing activities section as a cash payment under both methods.
C) The purchase of land would be presented in the non-cash investing and financing activities section.
D) The purchase of land would be presented in the operating activities section as a reduction in net income.

Question

Quizplus · Accepted Answer

The purchase of land using common stock is a non-cash transaction that affects both investing (purchase of land) and financing (issuance of common stock) activities. Therefore, it is reported in the non-cash investing and financing activities section of the statement of cash flows.

A Company Purchases Land Using Its Common Stock